3. Disruptive Automation of Growth Strategy Tasks
Dr. Karl Michael Popp
The phase M&A strategy definition is the first phase of the process model defined in [Popp,20] and describes the steps for a company to create and prepare the execution of an M&A strategy, further details in [Popp,23]. The Due Diligence phase is described in detail in [Popp,20]. Much of this section is taken from [Popp,23].
Tasks and their actions are the framework to mark up which parts of the M&A strategy phase can be automated by tools.
3.1 Overview of tasks within Growth Strategy
The following tasks make up the M&A Strategy phase:
- M&A Strategy.
- Target Screening.
- Simulation and modeling
Each task has a description, goals and objectives as well as data objects they are operating on. Tasks can be divided into several actions, which are also listed.
The disruptive automation of these tasks is described later in short automation scenarios.
3.2 Task M&A Strategy
Task description
The M&A strategy encompasses a holistic view, aiming to identify specific sectors and markets in which the company should proactively engage. Furthermore, it outlines the appropriate course of action for the organization within these designated areas. The M&A strategy is defined, deriving its foundation from, and complementing the overarching corporate strategy. This strategy encompasses a comprehensive and integrated approach that considers various strategic capabilities, including the current portfolio of products, services, and business models, as well as the organization's capacity to achieve success within a given market. Moreover, it considers the intellectual property (IP) strategy and the ecosystem strategy, which encompasses relationships with customers, partners, suppliers, licensors, and competitors.
When developing the M&A strategy, careful consideration is given to the existing portfolio of products, services, and business models. This ensures that any potential mergers or acquisitions align with the company's overall objectives and strengths, thus enhancing its market position and competitive advantage. Additionally, the strategy acknowledges the importance of IP and the role it plays in safeguarding the organization's innovations, patents, and copyrights.
Furthermore, the ecosystem strategy is a vital aspect of the M&A strategy, as it recognizes the significance of fostering strong relationships with key stakeholders such as customers, partners, suppliers, licensors, and even competitors. By cultivating collaborative and mutually beneficial alliances, the company can leverage synergies and create an environment conducive to innovation, growth, and longterm success.
Through the implementation of the M&A strategy, the company seeks to identify and capitalize on strategic opportunities that align with its goals and objectives.
Attributes of the Task
The task is a decision task.
The task problem is unstructured. The procedure is unclear.
The task has the following goal(s):
- Buyer M&A Strategy: planned
The task has the following objectives:
- Information asymmetry: minimized
- Quality: maximized
- Risk: minimized
- Synergy: maximized
The task consists of the following actions
- Analyze the existing strategy and identify strengths and weaknesses is automated by 3 tool(s).
- Analyze the existing portfolio of business models is automated by 3 tool(s).
- Analyse future business models is automated by 3 tool(s).
- Analyse future strategy is automated by 3 tool(s).
- Identify the strategy changes and fields of action to act upon is automated by 4 tool(s).
- Create an action plan how to adress strategic fields of action is automated by 2 tool(s).
- Define requirements for whitespaces for acquisition is automated by 3 tool(s).
The task works on the following data object types, among others:
Buyer business, Buyer strategy, Buyer M&A Strategy, Strategy, Buyer ecosystem strategy, Strategic measure of the buyer company, Assignment of strategic measures and goals of the buyer company, Strategic risks of the buyer company, Strategic assumptions of the buyer, Strategic goal of the buyer company, Hierarchy of the strategic goals of the buyer company, Buyer coverage of supply chain, Ecosystem of the buyer, Customer of the buyer, Customer segment of the buyer, Customer relationship of the buyer, Competitor of the buyer, Substitute for products of the buyer, Key partners of the buyer, Key resources of the buyer, Key activities of the buyer, Buyer's revenue streams.
Automatability
This task is partially automatable.
Tools are available.
3.3 Task Target Screening
Task description
With the result from the previous task, you have defined a space to search in and you have put requirements in place that the potential target should fulfill. First, finding targets requires a selection of the right sources to search for targets. You can look for acquisition targets in the company ecosystem, e.g. partners, suppliers, customers, competitors and in adjacent or remote markets. You can use service providers and company search databases to find appropriate targets. The search process might be iterative, so you might start with searching targets that fulfill only a few attributes, like e.g. strategy fit, size/revenue, target market fit. If you end up with a large amount of companies, you start the second iteration trying to fulfill additional attributes like business model fit, business scalability, technology fit or other attributes. Objectives of the task steer your work. You try to minimize information asymmetry by using several sources. In addition, you try to maximize the complementarity between buyer and target.
Due to incomplete information, it cannot be guaranteed that all existing, suitable targets are known to the purchasing company. For this reason, a basic set is created with the help of various sources of information, such as databases, industry experts and information on start-ups. When targets have been found, this is followed by detailed walkthrough of target candidates and a decision according to various criteria such as target competencies, region/location, sales, company size and technology attractiveness, which candidates make it onto the longlist of potential targets. From this set, companies are selected for the long list.
Attributes of the Task
The task is a decision task.
The task problem is unstructured. The task object is unstructured. The procedure is unclear.
The task has the following goal(s):
- Longlist of targets: created
The task has the following objectives:
- Information asymmetry: minimized
- Buyer-target complementarity: maximized
The task consists of the following actions
- Define selection criteria and market is automated by 6 tool(s).
- Scan sources for potential targets is automated by 5 tool(s).
- Review companies to join the longlist is automated by 5 tool(s).
- Define the longlist of targets is automated by 4 tool(s).
The task works on the following data object types, among others:
Target, Buyer, Target countries, Assignment of target markets to industry, Buyer Industry, Market of the target, Market of the buyer, Target company, Target locations, Longlist of targets, Ecosystem, Ecosystem of the buyer, Product of the target, Product of the buyer, Sales of the target, Target employees, Target business model, Buyer business model, Target business, Buyer business, Analyst company, Buy Side Advisor, Sell-side advisor, Market, Market Drivers, Customer of the buyer, Customer of the target, Supplier of the buyer, Supplier of the target, Cost Complementarity, Product complementarity, Brand complementarity, Target ecosystem strategy complementarity, Business model complementarity, Patent of the target, Patent, Patent of the buyer, Patent portfolio complementarity, Complementarity of countries, Financial complementarity, Complementarity of resource models, Service of the buyer, Service of the target, Services complementarity.
Automatability
This task is partially automatable.
Tools are available.
3.4 Task Simulation and modeling
Task description
The synergies from the Synergy Plan are mapped and simulated top-down to the NewCo structures and processes. It checks whether the synergies in this simulation model occur and are sustainable. In the software industry, product and cost and sales synergies are analyzed.
Attributes of the Task
The task is a decision task.
The task problem is unstructured. The task object is unstructured.
The task has the following goal(s):
- Synergy: analyzed
- Synergy plan: analyzed
The task has the following objectives:
The task works on the following data object types, among others:
Synergy, Synergy plan, Business model synergy, Synergy in the operations model, Brand complementarity, Previous acquisitions of the buyer, Complementarity of the GTM model, Complementarity of the strategy, Buyer-target complementarity,...
