Mergers & acquisitions (M&A) accelerates growth. While organic growth takes time and often requires development of new capabilities, M&A enables faster growth through access to new markets, sales and distribution channels, new capabilities, or by simplifying and optimising infrastructure, operations and costs. Refining corporate portfolios through disposals also creates value to re-orient and re-invest.
Successful execution of M&A, however, is elusive – many mergers and acquisitions fail. This reflects the range of uncertainties going into an M&A process:
- How will the target really enable new, sustainable growth?
- How valuable and overlapping is the customer base? Are sales channels profitable?
- In what direction could this deal take the new organisation?
- Are the targets, capabilities and infrastructure well understood?
- Which opex and capex synergies are really achievable and by when?
- How significant are integration challenges/costs likely to be?
- What does market research and horizon scanning reveal as key disruptions for which management need a clean plan and potentially strategy support?
KPMG’s Strategy practice provides strategic support with decisions on where to invest, uncovers new opportunities, and provides rigorous M&A support pre, during and post deal:
- Target identification and evaluation
- Buy-side commercial due diligence (CDD)
- Vendor commercial due diligence
- Revenue and cost synergy identification and quantification
- JV and partnership strategy
- Exit strategies, divestments and carve-outs
- IPO support
- Integration/separation planning and execution
The following case examples demonstrate our deal strategy approach and how it’s applicable on the island of Ireland.
Vendor commercial due diligence on a world-leading business services and tech platform
An international engineering, procurement, construction management and validation company with in-house tech solutions had growth organically into a 900 staff entity across over 20 offices worldwide, focusing on data centres, life sciences and advanced manufacturing projects. Discreetly targeting buyers and peers with our rapidly-deployed mass surveys, interviews, and KPMG’s proprietary data centre build-out database, our independent evidence base supported the reasonableness of management projections. The successful process resulted in a sale to a PE-backed US trade buyer for close to $1bn.
PE buy-side commercial due diligence on a builder merchant platform for bolt-on growth
Buyer was an Ireland-focused investment fund looking at a rapidly growing player in the builders merchant space. With plans for future bolt-ons, the bidder was interested in the operational benchmarking of Target, as well as the local reputation within the specific 60km radius hinterland. Supplementing our economic analysis around long-term viability of the sector with a mass survey of residential developers, sub-contractors and independent builders, our red-flag commercial diligence provided the required clarity on market and Target’s position within that in under 3 weeks.
Commercial due diligence on Ireland’s largest dairy merger
A dairy co-operative sought to merge with a peer – however the product and customer focus of each was materially different. Our CDD specialists used Management Information, discreet industry interviews with competition and retail channels, market analysis and proprietary benchmarking data to analyse the Target, its synergy and integration considerations. By challenging Target management’s existing strategy and using data triangulation to bring increased transparency on product by product profit contribution, our client was better positioned to proceed with the merger and a post-deal plan. Our analysis also assisted the review by the competition authority, approving creation of the new €1bn revenue entity.
Vendor commercial due diligence on a market-leading gift card
A conglomerate sought to divest an international, non-core business unit. With a range of Private Equity (PE) and corporate interest, our vendor CDD shed new light on a data-poor sector. By building credible market size estimates and evidencing the underlying drivers of continued growth, we could demonstrate the reasonableness of Target management’s projections. With a mindset beyond the immediate transaction, we also covered carve-out and integration considerations. Our work contributed to a successful €100m exit.
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Deal strategy and commercial due diligence requires informed decision making. For experienced guidance for your company, please contact our team below. We'd be delighted to hear from you.