Merger & Acquisition (M&A) Selections
What is a M&A selection and why is it important?
Merger and acquisition (M&A) selection is a component of corporate strategy that deals with the combining, buying and selling of companies to promote the growth of the enterprise in its sector. Selecting and combining of a smaller company with a larger company can boost financial power, market share, and business activity — allowing the newly formed company to further develop and expand within its sector.
Statista reported that in 2017, the value of global M&A deals amounted to 4.74 trillion U.S. dollars. Yet study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%.
With the number of mergers and acquisitions expected to rise over the next few years, many acquiring companies are looking for ways to improve their M&A decisions. A haphazard or silo’ed approach to evaluating candidate companies will likely result in failure, and potentially have a significant and long-lasting detrimental effect on the acquiring company.
How does Definitive help facilitate this process?
Definitive understands the importance of tying the evaluation process to the company’s strategy, and the need to systematically and holistically evaluate the candidate companies.
Definitive will help ensure that all key functional areas are included in the evaluation and due-diligence processes, such as finance, legal, human resources, marketing, and technology.
Definitive’s role is to facilitate the process, to include: the establishment and weighting of the selection criteria; the review and evaluation of candidate companies; the strategic benefit vs. cost trade-off analyses; and the decision-making process.
Definitive also assists the customer by managing the business process, developing job aids and reports, and providing and maintaining the support tools, such as Definitive Pro™ and Microsoft SharePoint.
Example Decision Model
Definitive Pro™ enables the M&A evaluation and selection team to collaborate anytime, anywhere, using any device. By making it easier to participate, we: bring together representatives from finance, legal, human resources, marketing, and technology; promote teamwork; and improve cross-functional insight.
Definitive Pro™ uses the Analytic Hierarchy Process (AHP) to accurately establish the relative importance of the decision criteria, and efficiently score all candidate companies. The consistent and transparent scoring process yields greater consensus and buy-in than other approaches.
Definitive Pro™ employs the Gurobi optimizer®, a state-of-the-art mathematical programming solver for optimizing the allocation of resources. The Gurobi optimizer can quickly identify the set of candidate companies that maximize strategic benefit, while satisfying all dependencies and constraints.
Faster and better decisions — Justifiable decision rationale — Historical record of decisions
Definitive Pro™ also powers group decision support for:
- Budget Formulation
- Business Opportunity Selections
- Business Partner Selections
- IT Demand Management
- Organizational Cost Savings
- Personnel Selections
- Product and Feature Selections
- Requirements Prioritization
- Risk Assessments
- Strategic Investment Selections
- Strategy Development
- Surveys and Audience Response
- Vendor Selections