Acquisition Analysis
In order to jumpstart your company's growth, it can be necessary to
look to markets outside the traditional ones in which your company
competes.
The acquisition of new businesses allows companies to quickly enter
these new markets and reduce their risk and payback period, by
acquiring a proven product or service in a market where the value
proposition has been tested and market validation has already occurred.
In a mature industry were margins are under pressure and competition is
high, it is growth from outside the core that ensures the long-term
success of a company, not the M&A activity that typically creates
increased efficiencies through consolidation within an industry.
However, traditional corporate finance theory tends to lead to
acquisition targets which are highly sustaining in nature
- investments
which bolster the core business, rather than pave the way for growth
outside the core.
Typical targets for M&A activity excel when analyzed through the
traditional lens of M&A theory using such tools as asset
valuation, earnings valuation, NPV, Market Growth or an analysis
of Industry betas. Additionally, your competitors will likely identify
the same set of companies resulting in escalating valuations and
unrealistic expectations from revenue and cost synergies.
The theories of Disruptive
Innovation provide an alternate framework
for identifying potential acquisition targets, allowing us to identify
companies that could help you drive growth outside your core business
and sow the seeds for long-term success.
Innosight Ventures help you with an Acquisition Analysis
- Identify small disruptive companies in adjacent industries that would not otherwise be identified as potential acquisition targets.
- Determine the strategic fit between the target company and your company using our proprietary Jobs-To-Be-Done approach.
Learn more about
The Theory of Jobs-to-be-Done