Intelligent M & A: Navigating the Mergers and Acquisitions Minefield, 2nd Edition

CHAPTER 3Designing the Acquisition Process

All stages in the takeover deal process require the effective use of business intelligence. Some points in the process (such as due diligence) will appear to fit more naturally into the traditional view of business intelligence, but effective use of the techniques outlined will assist in improving the success rate at all stages of a deal from when a takeover is first proposed through to the continuing integration of the two companies years after the deal has been consummated.

The term “appear to” is used above because even traditional due diligence has often been unfocused and therefore unsuccessful. This was certainly true in the case shown in Chapter 1 when Quaker Oats did not find out about the drop in sales of its target company (Snapple) until several days before the deal was announced, despite the ability to check with suppliers, grocery stores, and industry analysts about the sales of Snapple's drinks. Quaker Oats did not need to rely on Snapple to get this information and, even if they had received that information in a timely fashion directly from Snapple, they should have verified it with other external sources. As shown in that case, Quaker Oats could also have conducted better due diligence on the differing distribution systems used by its own Gatorade division and the target, Snapple. Similarly, in Chapter 2 we showed the spectacular intelligence failures of the Royal Bank of Scotland in their purchase of ABN AMRO.

Steps in ...