Time-Driven Activity-Based Costing

CHAPTER SIX

FAST-TRACK PROFIT MODEL

Creating the New Due-Diligence Process for Mergers and Acquistions

IN THIS CHAPTER, we push the limits of Time-Driven Activity-Based Costing by introducing a new capability for fast-track profit modeling.¹ We demonstrate how to quickly build a simple TDABC model for assessing the attractiveness of a company being considered for an acquisition. By using such a model during the due-diligence process, a prospective buyer can identify where profit opportunities exist, how they can be captured, their cost and impact, and whether the organization has the capacity to execute. While it may seem difficult to build an ABC profitability model of a company not yet owned, acquirers can often start from an existing profit ...