The Merger & Acquisition Leader's Playbook

CHAPTER 1The Investment Case: The Heart of the Merger and Acquisition Leader's Playbook

The first component of the strategic playbook is the investment case. It guides every other part of the investment playbook and every other playbook. The first, fundamental questions go to what you want out of an acquisition or merger, how it would fit with what you've already got, and what you're willing to give up to get it.

What You Want

Synergy happens when two or more people or businesses work together to create new value, capture existing value, or prevent or slow the destruction of value. That leads to some of the different types of mergers and acquisitions and the different reasons to do them:

• Merging organizations with complementary capabilities and strengths to create something that no one else can do, like Stanley merging its hand tool and construction strengths with BLACK+DECKER's power tool strengths.
• Adding innovation or technology capabilities, like Disney buying Pixar to leverage its technology across all animation.
• Gaining access to a new market with a new business model or new Internet protocol, like Google buying Android to give it an operating system.
• Expanding product and service offerings, like executive search firm, Korn Ferry's string of acquisitions to add other human capital consulting offerings.
• Shoring up a weakness to stop destroying value, like Philip Morris ...