Live Demo of a Mergers and Acquisition Case Interview (Part 11 of 12) | caseinterview

Summary

在这段视频中，讨论了并购（M&A）的策略和分析框架。首先介绍了并购适配框架，用于评估目标公司是否适合被收购。通过分析客户、产品、公司和竞争四个关键领域，可以判断两家公司合并后的潜在价值。视频中通过一个虚构的广告公司Omega and Omega的案例，展示了如何应用这个框架。该公司面临销售停滞的问题，通过分析发现，尽管整体广告行业增长5%，但数字广告领域却以30%的年增长率快速增长。Omega and Omega擅长传统媒体广告，而市场正向数字广告转移。因此，建议Omega and Omega考虑通过并购来获取数字广告领域的能力和市场份额，特别是考虑收购在这一领域增长迅速且市场份额大的公司。视频还讨论了并购中的文化适配问题，以及如何通过组织结构调整来最小化潜在的文化冲突。

Takeaways

• 📈 **增长策略**：企业在考虑并购时，不仅要考虑是否值得收购，还要考虑特定目标是否合适，这涉及到对目标公司的全面分析。
• 🤝 **互补性资产**：并购中常见的互补性资产情况是，一家拥有强大品牌和产品的年轻公司与一家拥有强大销售力量但产品不佳的老牌公司结合。
• 💰 **成本协同**：通过合并可以削减重叠的内部成本，如两个公司都有人力资源部门，合并后只需保留一个，从而节省成本。
• 📊 **市场和行业分析**：分析公司的盈利情况时，需要查看收入和成本，并考虑市场整体趋势，判断问题是公司特有的还是整个行业普遍存在的。
• 🔍 **客户和产品分析**：了解客户群体和产品类型对于确定并购是否适合至关重要，需要分析不同客户群体的需求和市场对不同产品的接受度。
• 🚀 **市场变化应对**：面对市场结构性变化，企业需要调整策略以适应需求变化，可能通过内部建设或外部收购来获取所需能力。
• 🛠️ **公司能力与专长**：企业在考虑并购时，应评估自身在品牌建设、创意媒体、在线广告等方面的核心能力。
• 📚 **数据分析**：在分析过程中，区分不同客户群体的媒体消费习惯和广告投放偏好，以及这些习惯如何随时间变化。
• 💹 **利润与增长**：了解不同业务部门的利润和增长情况，特别是那些快速增长的领域，可以帮助企业确定并购的潜在价值。
• 🤔 **结构性转变**：识别并理解市场结构性转变的原因，如消费者偏好的变化，对制定并购策略至关重要。
• 🏢 **组织文化与整合**：在考虑并购时，评估两家公司的组织文化和潜在的整合问题，以确保并购后能够顺利运作。

Q & A

什么是并购适配框架（mergers and acquisitions fit framework）？

并购适配框架是一种用于评估潜在收购目标是否适合被特定公司收购的工具。它主要关注目标公司是否与收购公司在客户、产品、公司本身及竞争环境等方面相匹配，而不仅仅是评估收购行为本身是否值得。

在并购中，互补资产的经典情况是什么？

互补资产的经典情况是一家拥有热门品牌和新产品但分销有限的年轻公司，与一家拥有庞大销售力量但产品质量一般的成熟公司之间的并购。通过并购，可以将年轻公司的产品通过成熟公司的销售网络进行推广。

在并购分析中，如何看待公司内部成本重叠的问题？

在并购分析中，公司内部成本重叠被视为潜在的节约领域。如果两个公司合并，可以精简重叠的部门，如人力资源部门，从而减少成本开支。但同时要注意保持公司的核心优势，避免因过度缩减而损害公司价值。

在分析Omega和Omega公司的案例时，为什么销售增长停滞不前？

Omega和Omega公司的销售额增长停滞不前，是因为其主要客户群体——大型跨国公司的广告支出没有增加。同时，市场整体在增长，特别是数字广告领域，但Omega和Omega公司在这一领域的业务占比较小。

为什么数字广告领域的增长速度远远超过其他广告领域？

数字广告领域的增长速度超过其他领域主要是因为客户群体的偏好改变。大型公司越来越倾向于在线媒体投放和可量化的媒体形式，这使得数字广告成为增长最快的领域。

在并购分析中，为什么需要考虑文化兼容性问题？

文化兼容性是并购成功的关键因素之一。如果并购后两家公司的员工无法良好合作，可能会导致整合失败，影响业务运行。文化差异可能导致员工抵触、效率低下，甚至关键人才流失。

在考虑并购时，为什么需要进行竞争对手分析？

竞争对手分析有助于了解目标公司在市场上的地位，包括市场份额、增长速度以及与竞争对手的比较。这有助于评估并购后能否实现战略目标，如市场扩张、产品线增强或成本节约。

为什么Omega和Omega公司可能需要考虑并购来应对市场变化？

Omega和Omega公司面临的是市场需求的结构性变化，他们的传统强项（如电视广告和品牌建设）正在萎缩，而他们不擅长的领域（如数字广告）正在快速增长。通过并购，公司可以快速获得新的能力和市场份额，以适应市场变化。

在并购分析中，为什么需要考虑产品线是否有重叠？

考虑产品线是否有重叠对于确定并购后能否实现协同效应至关重要。如果两家公司的产品线高度重叠，可能会导致内部竞争和资源浪费。相反，如果产品线互补，可以扩大产品范围，满足更广泛的客户需求。

在并购决策过程中，为什么需要考虑收购价格？

收购价格是决定并购是否经济合理的关键因素。即使两家公司在战略上非常匹配，如果收购价格过高，也可能使得并购无法带来预期的投资回报，甚至导致财务负担。

在并购分析中，为什么需要考虑公司的组织结构？

公司的组织结构影响并购后的整合过程。不同的组织结构可能导致不同的管理风格和运营效率。在并购分析中考虑组织结构有助于预测和规划并购后的运营模式，确保整合顺利进行。

Outlines

00:00

😀 概述并购适配框架

本段介绍了并购适配框架，用于评估公司A是否应收购公司B。框架侧重于分析目标公司是否适合并购，而非并购行为本身对行业的影响。框架包含四个关键领域：客户、产品、公司和竞争，类似于商业情境框架。

05:08

🤝 互补资产与协同效应

讨论了两种典型的并购情况：互补资产和协同效应。互补资产是指一家公司拥有优秀的产品但分销有限，而另一家公司拥有强大的销售力量但产品一般，通过并购可以实现产品和分销的优势互补。协同效应则是指合并后的公司价值大于各自独立价值之和的情况，通常涉及内部成本重叠和效率提升。

10:10

📈 行业增长与公司特定问题

通过案例分析，探讨了公司销售停滞的问题。通过对比行业整体增长和公司特定情况，发现虽然公司销售停滞，但行业整体仍有增长，表明问题可能出在公司而非整个行业。进一步分析了竞争对手和市场细分，以及不同广告代理公司的市场份额和增长情况。

15:14

💡 客户细分与市场变化

深入分析了客户的不同细分市场，如大型跨国公司、中型企业和小企业，并探讨了这些细分市场的增长情况。提出了在分析中遇到难题时，通过细分来深入理解问题的方法。

20:25

📊 广告支出与媒体类型分析

分析了不同客户细分的广告支出变化，以及媒体类型的分布情况。发现虽然总体广告支出保持稳定，但在不同媒体类型之间存在转移，特别是从传统媒体向互动媒体的转移。

25:25

🔄 市场需求的结构性变化

讨论了市场需求的结构性变化，如互联网的快速增长对广告行业的影响。分析了Omega和Omega公司在不同媒体类型上的专长和市场表现，以及它们与市场需求之间的不匹配问题。

30:27

🎯 收购策略与市场定位

提出了针对Omega和Omega公司的战略建议，包括通过收购来获取市场快速增长部分的能力。分析了潜在收购目标的市场份额和增长速度，并讨论了收购的潜在好处，如扩大客户基础、获取新产品类别以及利用现有账户作为新工具的分销渠道。

35:28

🤔 文化兼容性与收购决策

讨论了文化兼容性在收购决策中的重要性，指出文化差异是导致收购失败的主要原因之一。提出了在组织结构上采取措施以减少文化冲突，如保持独立运营或合并等。

40:28

💭 收购的价值与市场参与

最后，讨论了即使在交叉销售协同效应不大的情况下，通过收购参与可能主导市场的细分领域，可能是一种比自建更快速的方式。强调了在不同情况下，收购的合理性会有所不同，需要根据具体情况来评估。

Keywords

💡并购

并购指的是两家或更多的独立企业合并成一家企业的过程，通常涉及一家公司购买另一家或多家公司的股份或资产。在视频中，讨论了并购的适配框架，以及如何决定是否进行并购。

💡市场适应性

市场适应性是指企业根据市场变化调整其产品、服务或业务模式的能力。视频中通过Omega和Omega公司的案例，探讨了公司如何通过并购来适应市场变化，特别是转向数字广告服务的市场需求。

💡市场细分

市场细分是将市场划分为具有相似需求或特征的消费者群体的过程。视频中提到了对不同客户群体进行细分，以识别和理解他们的需求，从而为并购决策提供依据。

💡竞争优势

竞争优势是指公司在市场中相对于竞争对手所具有的有利地位或优势。视频通过分析Omega和Omega公司与竞争对手之间的差异，探讨了如何通过并购来增强公司的竞争优势。

💡成本协同

成本协同是指通过并购减少重复成本，实现规模经济。视频中提到了两个大公司合并时，可以通过整合相似的部门（如人力资源部门）来减少成本。

💡资产互补

资产互补是指并购双方的资产可以相互补充，提高整体价值。例如，一个公司可能拥有强大的品牌和产品，而另一个公司可能拥有广泛的分销网络。视频中讨论了这种互补性如何成为并购决策的一个关键因素。

💡市场增长

市场增长是指市场规模或价值的增加。视频中分析了数字广告市场的快速增长，并探讨了Omega和Omega公司如何通过并购参与这一增长领域。

💡文化差异

文化差异指的是不同组织在价值观、行为准则和工作方式上的差异。视频最后讨论了并购中文化差异可能带来的挑战，以及如何通过组织结构调整来最小化这些差异。

💡客户偏好

客户偏好涉及客户对产品或服务的特定需求和喜好。视频中通过分析不同客户群体的偏好，揭示了Omega和Omega公司需要调整其服务以满足市场需求。

💡产品组合

产品组合是指公司提供的所有产品或服务的集合。视频通过比较Omega和Omega公司与Equal公司的产品组合，展示了并购如何帮助公司扩展其产品线并进入新的市场细分。

💡市场结构变化

市场结构变化指的是市场的基本组成或运作方式发生的变化。视频中讨论了广告行业从传统媒体向数字媒体的转变，以及这种结构变化如何影响公司的并购决策。

Highlights

讨论了并购的框架，特别是当公司A决定是否收购公司B时使用的方法。

介绍了“并购适配框架”，关注目标公司是否适合收购，而非一般性的并购价值。

通过四个关键领域（客户、产品、公司和竞争）来分析并购的适用性。

提到了互补资产的经典情况，如新公司有热门品牌但分销有限，而老公司拥有强大的销售力量。

讨论了合并带来的潜在协同效应，尤其是当两个公司合并后的价值远大于各自独立价值时。

分析了内部成本重叠的问题，如两个大公司合并后可以精简人力资源部门以降低成本。

通过虚构的Omega and Omega广告公司案例，展示了如何应用并购框架来解决实际问题。

分析了Omega and Omega公司销售停滞的原因，发现成本和收入均未变化。

通过对比行业整体增长，发现Omega and Omega公司的表现与行业整体不符。

识别了数字广告是行业内唯一快速增长的细分市场，年增长率达到30%。

探讨了为什么客户快速向数字广告公司投入资金，而其他公司却没有获得同样的增长。

分析了不同客户群体（如财富500强品牌经理和中小企业）的广告支出变化。

提出了在市场结构性变化时，公司应如何利用其资产和能力来响应变化。

讨论了Omega and Omega公司在创意电视广告方面的专长与市场需求之间的不匹配。

提出了通过并购来快速获取公司不擅长但市场需求高的领域的能力和产品。

分析了潜在并购目标Equal公司的产品线，发现其产品正是快速增长客户群体所需的。

讨论了并购后的公司文化融合问题，以及如何通过组织结构调整来最小化文化冲突。

强调了在并购决策中考虑价格之外的因素，如市场定位、产品组合和公司文化的重要性。

Transcripts

all right let's talk about mergers and

acquisitions

okay so pull up the framework sheet let

me walk you through the framework

actually quite straightforward actually

this is what I call the mergers and

acquisitions fit framework and it's

generally used when company a is

deciding whether Company B is the right

amongst the companies available to be

acquired is Company B the right one to

acquire is less about is it worth

acquiring someone in general in terms of

sorting trying to change the industry

capacity it's more about is this target

particular target makes sense okay and

the easiest way to understand this I

mean it really is just a variation of

the of the business situation framework

so MA and we're using slide a here ma is

it's still my four key areas customers

products company and competition ran up

space here and essentially what I'm

doing conceptually is we have company a

which is the potential acquirer company

B and then combine new company

and the general rule of thumb is you

sort of go through the exact same

process we did earlier but for each

individual company and you sort of

synthesize you add up what the combined

entities would look like those common

M&A situations are mile there tend to be

in one of two categories one is

complementary assets so the classic

situation is young company has hot brand

new product ok but very limited

distribution old company has like the

biggest sales force on planet earth but

their products stink okay

so it's like well you could just take

the product in product a company a I'm

sorry company B move it to the acquiring

company pump it right into the sales

force and boom they got the hottest

product mark with the best distribution

wouldn't that be great so conceptually

that's how it typically works the other

area is actually those are ones I like

just supper from the case those are the

ones I think make the most sense

right so in an obvious synergy where the

two combined are worth a lot more

together than apart other areas

essentially are around

internal cost cost overlap so you got a

big company I got a big company we have

we each have like an HR department that

spends 50 million a year we only need

one so you can sort of combine it to

companies strip out and have one

department in say 50 million a year and

that tends to be more on the cost side

but you know you can't shrink the

greatness right so that's sort of just

one area looking and so I'll give you as

one example see if I got all the points

here yeah make sense so far okay

the case I want to give and demonstrate

since we're on the topic of media anyway

is there's this fictitious company it's

an advertising agency so global brand

advertising agencies serving consumer

packaged goods companies and I'm going

to call them Omega and Omega okay you

can speculate who they are and Omega and

Omega they are a billion dollar company

roughly and their sales are flat and

their sales are flat past three years in

a row and they they contacts your firm

and wants you to help them

help us fix this problem we need growth

or flat three years in a row what should

we do and actually know what this case

was sort of assuming I did an earlier

case which I skipped okay so let me I'll

give you the answer to the prior case

Omega and Omega they how much fun do we

have two o'clock when I'll do the whole

thing okay I'll do I'll go through

swithed isness situation framework for

Omega and Omega and I'm gonna tell you

in advance it's going to end up evolving

to an MLA case you can sort of see how

that flows and I'll try to point out

some ojas that would trigger a thought

that it should be there man okay okay

Omega Omega flat sales actually this

will be even better we use all the

frameworks even better I'm so excited so

I'm going to slide F here so

we are talking about Omega and Omega

profits are flat at 0% to understand why

profits are flat we need to look at

revenues and cost okay and it turns out

there's been no change in cost and

there's been no change in in revenue

and the next question then is okay well

what about what are the components of

revenue and we know if there's a change

in revenue per count let's say or the

number of accounts

and it turns out the clown growth has

been flat and the revenue per account

has been flat so that's interesting so

really no real change so next question

is what's happening to the market

overall right so one of the things on

the checklist on the original

profitability framework and it turns out

that and usually when I swear to do

comparisons I like to start with the

most general number first and then and

then then break down so if you're sort

of down and you realize I'll kind of the

industry comparison it's often better to

sort of jump up a level because it's

less math that way so I would say that's

interesting I would say out that

probably I now wonder if this is a

company specific issue or an

industry-wide issue and and then I would

pie say do we have information on

whether profits for the advertising

industry overall is it has changed not

is it going up as a flat or decline and

so I've been here so this is sort of

industry I see this right industry and

oh oh and OH

because it's well two reasons one sort

of practical one sort of discuss one as

I know the answer is sort of the real

answer and the other one probably if the

the the way the question was phrased as

they want to grow faster and so if costs

are flat and they haven't changed then

if I no cost better I still can't grow

it so I need either our pricing

improvement to an improvement so that

was for why sort of gravitate towards

that and I didn't have any data there so

I wanted to you know hasn't you stripped

it over that way and so let's say so if

we look at profits over all Omega and

Omega is flat industries growing at 5%

ok well that's interesting so obviously

we're doing something different than the

industry overall

that's why AHA ok ok so so this is it's

not clearly just a company specific

profitability problem there's something

going on difference in the industry

overall perfectly for won't cut it ok so

I'm going to switch I'll leave this over

here and we're going to a slide G here

and I am going to do the business

situation framework because I'm like

what that was one I have no idea

something weirds going on and to

understand what's going on for Omega

Omega in this industry when you look at

four key areas when you look at the

customers the products company itself

and competitors

okay now in this particular situation I

have some data and insight that there

are some difference between what the

company is doing the competition okay so

I want to I would probably in this case

be tempted to start there and we can

pull that one out okay so if we look on

our checklist the the first question I

would ask is who are the major

categories of competitors and what's the

concentration in market share okay

and so let's say there in this case the

interviewer might say well there are

three classes of four classes I think of

advertising agencies okay that's a

segmentation right and they are

global ad agencies to direct response

media agencies I will explain what those

are in seconds and digital advertising

and then media buying

okay great and I would ask sort of a

clarifying question so what is a direct

response agency they do like direct mail

okay got it digital ads they sort of do

online advertising is that right yes

that's right

what does media buying thing well the

way the ad agency business works you've

got people who create ads you know

people who buy ad space they tend to

split it up so they're specialists who

buy ad space and the specialist who

create ads okay got it so that's what it

looks like so I'm looking at the

competition concentration so what's the

mix like what percentage of total pie

that each people have you know and we

know in total it's a hundred percent and

let's say I don't know media buyings

and twenty percent the global ad

agencies fifty percent will call this 20

percent and 10 percent okay okay so it's

fairly concentrated at least like

category within global agency is roughly

how many are there like four or five

okay okay got it sort of a oligopoly ish

kind of structure okay so the next thing

is around competitors and their

behaviors so we would like to know more

about each of the categories of

competitors we know what the mix is and

so since we have this unusual situation

where the company our company is has

flat growth by the industry overall it

has 5% growth we want to know where the

growth is coming from so I'd say well

now that we understand what the

competition situation competitive

situation looks like I like to

understand what the profit is we know

overall it's 5% but by segments what's

the profitability growth for each of the

major segments so so this is sort of

market share and this is growth rate of

profits

turns out all global ad agencies are in

fact actually shrinking okay

so overall but engines the segment our

client is in is actually shrinking a

little bit so they actually outperform

by here direct response is and growing

it's also flat meeting buying is flat

and digital advertising is growing at 30

percent per year that's enough haha

interesting so really it's not the

industry overall its profits increasing

its really a particular segments within

the industry that's really driving the

overall numbers so we really have to

figure out is what's going on there with

digital advertising okay now would say

AHA now this is a time where I have the

aha I understand what's going on and on

the competitive side now I want to know

why digital advertising is going so fast

and this is when I'm inclined to switch

over to the customer branch okay so I am

temporarily leaving best practices

barriers to entry supply to conservation

all that because I have some information

that suggests another issue is far more

relevant is why are these customers

giving these guys so much money so

quickly when everyone else is getting

none of it so that's what my decision is

to switch so the way I would transition

and say it's interesting it looks like

the customers are really driving and the

increase in digital advertising growth

it's the only segment that's sort of

profitable on an increasing basis it

looks like we need to under better

understand what's going on with

customers so I'm going to switch gears

unless we have any other information I'm

going to switch gears and talk more

about the customers and the interviewer

might say that sounds like a reasonable

plan to me why don't you go ahead and do

that okay or they might sort of prompt

you and say give you another some

feedback saying yeah not quite yet and

ask you to go further that's fine too

but I think in this case they'll be

reasonable switchover okay that's

talking about the customers so who are

the customers right what are their

segments and let's look at the growth

rates for each segments that's the first

question on the checklist

so let me get a new slide this is what

is this that's G so let's see FG that's

must be H so you slide H here and we're

gonna look at customers and I would like

to say okay so what what I'd like to

know more about the customers overall

and what are the major segments and and

the integral I well here's we do know

there are let's see

fortune 500 sort of brand managers if

you would brand company so like a PNG

okay yeah let's see who else they're

sort of mid-market and I don't know

small business okay that's interesting

and what percentage of that dollars to

sort of belong to each segment and it

turns out so short of share of spending

the big PNG kind of companies out there

spending 70% then mark is 20% side in a

small business of 10 percent so I'm

parting that so okay so really the bulk

of the markets being driven by the large

multinational companies okay

just out to get to what's the what is

the change in what is the change in

spending across all of these segments so

total ad total ad dollars actually this

math going to work out my math isn't

going to tie perfectly yeah quite

question

yeah yes yes they will tell you

that's fine too sometimes in real life

you don't know right

oh really uh I never had that so so they

told you to make up a number basically

you

is that that sounds a little bit more

like an estimation question okay that's

different so on an estimation question

that's more testing your ability to well

estimate and it's less about finding the

business implications of the data so I

that I have done a lot to others and

then have been on the receiving end and

that's less about sort of business

judgment analysis it's more about sort

of computational flexibility in those

situations that so that's a different

intelligent kind of problem if we have

time to end having to walk through that

wasn't planning on average and some

other resources that are available that

sort of cover that topic fairly well the

book case in point is one of them so

back to here my numbers are going to tie

up but if you don't hold me to that

I'm going to say that see share spending

was my next question so share spending

and change change right right so let's

say it's all flat

so that's like that's interesting how

does that work okay something must be

going on well and so now I'm sort of

like thinking I'm sort of stuck okay

when when you're stuck in like seems odd

something doesn't seem bright I know I

clearly not I'm clearly not

understanding something Golden Rule

when in doubt segments when in doubt

segments I mean that's sort of saved my

butt a lot of times okay so we segment

to think it's biggest right because

obviously has the most leverage you know

if the small business want to change a

lot it's such a small percentage it

makes no big difference on the bottom

the aggregate number so I'm going to say

well that's really interesting something

unusual is going on here I'd like to

sort of break out the the Fortune finder

multinational companies and segment that

and look at what are the sub segments

within that mark that customer segment

and then also I'd like to look at

whether their ad spending has changed

them up and so we are going to split out

the fortune 500 and this is where you

say I want a segment and then you sort

of shut up

and they'll tell you how to segment

because a lot of ways you could segment

and so they're going to say well there's

yeah

I literally just I said I would say um

clearly okay I'm not sure what's going

on here but something's very odd how can

you have one type of competitor who's

going 30% per year when the old one

markets flat the big company seems to be

is fairly flat so gosh I'm puzzled okay

yes

yes so so the question is in this

particular situation you could have a

segment of competitors who whose

revenues are increasing but it could be

related or unrelated to the fact that ad

spending hazard has not changed I gotcha

so points

I would probably and that's I probably

would ask and because this is a

percentage basis right to your point

so maybe the absolute dollars are

changing that's a fair point and I would

probably in hindsight I probably asked

for absolute numbers rather than

percentages so I get the percentage

which I wonder which that one's largest

and then I would probably at some point

realize I have to get absolute numbers

because because I don't know because it

could be one of those two things

so I'd say okay now that I understand

that this is the biggest segment let's

look at total $1 spent you know for this

and so let's say that's I don't know

we'll call it for total ad spend by

segment let's call it four billion and

there are two segments there are the

fortune 500 sort of brand divisions and

of the fortune 500

I'm not interactive okay and interactive

is a billion brain this three billion

okay and so that's like that's

interesting and here's in terms of the

total how has that changed versus the

previous series on absolute dollars in

any mere sight well it's actually been

fairly steady the past three years

that's what's interesting so then within

the segments how have how have numbers

change and they might say well the in

the fortune 500 brand division the brand

divisions of the fortune 500 companies

that's been shrinking so that used to be

three and a half billion you know two

years ago and this year it's only three

billion and the it's so basically it's

basically moving from traditional media

to to interactive okay all right so so

then so we know ad spending for the

interactive divisions are going up and

the ad spending on the traditional four

should find brand managers is going down

so I would say our synthesize at this

point okay that's interesting so it

looks like from a industry standpoint

the companies that are doing the best

are the ones that are offering digital

advertising services

to be the only growing fast growing

segment if you look at the customer side

on the demand side overall demand for ad

spending has been fairly flat and it's

actually been a big shift fairly rapidly

I might add between sort of traditional

advertising towards online interactive

advertising and and if I wanted as an

interview to push this to an M&A

situation I would say great that seems

like a reasonable conclusion now what

would you recommend to the clients and

that would be a way to force it to more

of an M&A tie between oh I'd let it keep

going and so we can sort of explore

things more and figure out why what's

changing so there are things around

product issues potentially so

interactive advertising is a different

kind of product than traditional you can

understand why there's lots of things

you sort of make up there but I'll sort

of speed it up a little bit so we can

get more onto the M&A side and so I

would say that's it comics my framework

here okay I'm going to keep on going on

the customer stuff because there's a

couple more insights I want to want to

pull out so the question at this point

now is is what so we understand

interactive advertising in the global

fortune 500 is really driving the shift

on the demand side and on the supply

side like why is it happening so we just

keep going down the framework on let's

see on the business situation framework

so you know what does each customer

segment want the interview might say

well the fortune 500 companies they're

basically they're very media centric

towards traditional media so newspaper

new print media television and

television and radio and the the

interactive agencies office they're sort

of very very geared towards two things

one is online media placements and the

other is they like sort of very

measurable media okay so where you can

track responses so they have a vent

towards a lot of statistical analysis

whereas the traditional media they're

more interested in like creativity

brands you know make building the

emotional connection to customers okay

so that's interesting yeah might say at

this point when we back up for a second

for for Omega Omega I just want to make

sure I got this right

Omega mega is in the

we'll a brand agency what is their mix

of business what percentage of media is

through the various media types and

exactly it might be relevant so I would

draw this out

jump back over and the interview might

say well about 50% of their media

spending from their clients is

television 25% is is radio and like 20%

is radio and 5% interactive interesting

so I would say aha

right I've been AHA and I would say well

looks like the problem is Omega and

Omega they're really strong in the area

that customers are carrying less and

less about it happens to be big today

but it's not where the growth is and the

customers are shifting towards

interactive media all right next issue

we belong on price you know what is each

some willing to pay and and if I were to

ask that question you might say well the

standard Commission for traditional

media buyers and ad agency is like 15%

Commission so on hundred million dollar

budget the agency gets at fifteen

million bucks okay that's interesting

well what about for the digital

interactive agencies well their

Commission's are higher they get a 20%

Commission well interesting okay so

they're getting more money that's

probably what's driving the revenue

growth of that segments even though ad

spending overall is fairly flat and in

aggregate it's a more profitable product

basically

how and this is an action one um nice

ward of AHA and formulation which I

haven't valid yet is I'm wondering why

they're shifting from traditional media

to online media okay now prior knowledge

would say well it's because internet's

going so fast right but i want to assume

that so I would say it's interesting I'm

learning what's driving this trend so I

within this framework I'm gonna within

this and else I'm going to step out for

a second and I like to look at further

down the stream in the in the industry I

want to look at viewership okay and I

would be interested in knowing amongst

the four major media types

how has the viewership or the equivalent

listenership readership how has that

change across the major media types and

the interview might say well we know and

in the major segments like television

radio you know radio newspaper ran and

Internet the top three are flat

Internet's growing top three are

shrinking and Internet's growing fast so

maybe in that's going thirty percent per

year although other ones are shrinking

and in fact it's actually what's

happening today so if I had her that I'd

say aha another aha okay so this is a

structural shift being driven by viewers

that's flowing through to advertisers

who want to be where the people are

which is impacting the profitability of

the agencies that are trying to serve

these advertisers so what's happening

here is a structural shift and you asked

earlier about what happens when it's a

market problem versus an internal

problem and this is exactly what that

kind of situation you have a structural

shift in demand now the question is what

do you do about it

so as an interviewer I would say that's

an interesting interesting sort of

insight what would you recommend to a

mega mega and let's see now I'm gonna

hold off on that for a second

okay so basically now the question

really is the problem really is the

markets really changed - favorite

segment that Omega mega is not in what

should i may go make a do about it now

at this point I kind of understand the

demand drivers let's demand and that's

more about like what options doesn't

make it make it have to sort of deal

with this demand problem because you

can't really change in demand much right

so now it's more like how do we respond

issue so back to the original framework

I would say okay I think we have a good

grasp on on what customers are doing

what they're doing is they're just

following their customers that's really

it and their customers are moving and

shifting their viewership habits so the

advertisers are doing the same thing so

the question now is what do we do about

well what do we have what assets do we

have alright so what we ask us we have

we can use and let's figure out what we

can how we can respond so I'm going to

jump over here and now look at the

company because it seems like if you

have a good sense of what the company is

capable of doing we're not capable of

doing a better sense of what options

they can use to respond to the market

situation that are structurally changed

so let's talk about the company first

issue on the list is capabilities and

expertise what is omega and mega good at

ok turns out they're very good at

creating blockbuster television ads ok

it's what the interview might say

they're very good at creative media

they're very good at branding they're

very good at sort of the jingles and the

slogans and sort of building brand new

brand new brands it's interesting and in

terms of of distribution channels Omega

mega has a direct sort of sales for if

they're constantly contacting the

Fortune finder accounts which is fine I

might be tempted to jump back into

customer and say well what kind of is

there a difference in the channel

preferences right for for each of the

segments in this case I've been jumping

around a little bit because of the ihot

I might have jumped too soon

all right because next on the list I

would have had distribution channel

preferences was one of the things on the

checklist but I sort of jumped back for

because I thought this is more important

sometimes I'm wrong and if you're right

you can switch back but you got to be

real clear about it ok so the way you

would say that is well interesting just

a double check I think I know the answer

I'm a double track I want to make sure

they're the two major segments and the

cust

the advertisers what distribution

channels are they using for placing ads

turns out they're using using agencies

so okay I that's checked so we're sort

of in the right ballpark okay and ant

let's see the the inside I'm trying to

drive towards is there's a mismatch

between the capabilities of what Omega

Omega can do and what customers that the

fastest-growing customers really want

okay so I mentioned earlier that that

the interactive customers they want

online media placements and they want

really good metrics that help relieve

they want to basically mass driven

marketing okay and in this case when

mega mega wants creativity driven market

that's what they're good at doing so

then the interviewer might say well what

do you do what do you tell them they go

and make it to do okay well that's a big

challenge I think so basically about the

so much what's going on Omega Omega is

facing a structural shift in market

demand yeah where the segments omega

mega is strong in is shrinking and the

segments Omega and Omega is poor in is

growing incredibly fast okay so Omega

Omega is not positioned properly in

marketplace relative to new market

demand and I and the in terms

recommendations they got to be where the

demand is and I think you've got one of

two options typically you either sort of

build that capability internally or you

go buy okay and so while the energy

might say interesting insight well which

would you suggest yeah well I might go

back and look at the company more look

at the capabilities and really sort of

hone in on what capabilities Oh Meghan

mega has and then compare that to what

customers want and there's a short short

in the process I'll just tell you like

what they're good at the customers don't

care about at all okay so a total

mismatch okay they want these are great

TV people they hate TV these are brand

people they hate brand these are

emotionally driven people these are all

like numerically driven people okay

total polar opposites and so given that

information what he suggests Omega Omega

some sort of abbreviating certain parts

of the case to get to the MA part I

would say well given that there's a not

just a skills mismatch between what

Omega mega is good at and what customers

want seems to be a sort of a cultural

difference to that way

Omega mega people tend to think about

advertising is a totally different than

the pneumatically driven marketers that

are interested interactive advertised so

in that situation I think you're the

best option seems to be looking at an

acquisition because the billet

internally it seems like it's too big of

a leap so I'd be looking towards looking

at acquisition options in determining if

there are any adversity and targets that

we were considering okay great let's

talk about that more the interviewer

says okay great I thought the case was

over but I'll keep going cuz this is my

third frame right and I would say well

what would you what would you suggest

which companies which company should

Omega and make a potential look at

acquiring well I'd like to actually do a

see I guess there would be a competitor

analysis I would like to actually take

the digital advertising segment that's

going on 30% here and I would like to

sub segment that into who the key

competitors so basically it's a

competitor analysis all over again right

so who are the key competitors and

what's the market share differential

between each of them so there is we'll

call it what do they call it there's

equal advertising there is super click

and I don't know math ads

and together I forget what do we say

they're doing a let's call it a billion

and so quick Greeks we know what the

three major competitors are almost

called everyone else what's the market

share structure look like and so equal

is doing four hundred million super

click is doing two hundred math ads it's

doing two hundred and everybody else is

doing two hundred okay that's

interesting and just article companies

are in the final category

oh yeah I'm sorry so we have a situation

where equals dominant player we got sort

of two mid-level players and then we

have everyone else that's sort of

picking up all the pieces and I might

ask well I've just had to make sure

curiosity how many people are in

everyone else 500 okay so it's a very

very fragmented so I would say well look

based on the market shares wipe I asked

for growth rates - okay so who's growing

are they shrinking and if I got growth

rates - and it ran out of space

unfortunately let's just say all of them

are growing but equals growing the

fastest okay if I were to pull back up

I'd say well it looks like amongst the

potential targets the three top market

share players might be a good fit

they're all going fairly well and G's

equal looks fairly interesting because

not only are they the biggest but also

growing the fastest right

equal first great why don't you do that

what would you want to know and this is

where I go to that original M&A

framework

so to summarize ma from here basically

doing the business situation for me for

each company independently and then

adding the two together okay and

actually I've done this I have not used

this matrix but it's actually not a bad

idea

so I would say well for customers for

Company A which is Omega and Omega and

we're on slide here

company a make Omega n Omega o and O and

equal they have the brand the fortune

500 brand accounts I would do the

business situation analysis for equal

and I discover they have the primary

segment is the fortune 500 sort of EE

accounts all the interactive arms of

these fortune cookies and so this is 80%

of the business for Megan Omega this is

80% of the business for equal okay okay

so I'd say that's interesting there

seems to be very little overlap okay so

that if Omega Omega which were quite

cool it would in fact be getting a very

big position in this fast-growing

segments so that seems interesting I

could do the same analysis around

products and and in the the key products

for Omega and Omega are sort of like TV

ads focus groups sort of brand concepts

the product set for equal is you know

database marketing tools statistical

modeling and then sort of online advice

so there's no overlapping products

either so you don't have to like you

know kill one of the products or

anything like that so you're their body

they would be buying into a whole new

category of products I would probably

just verify that the products that equal

has is in fact what customers want I

mean I'm feeling pretty good about that

cuz the revenue so fast but I applied a

double check and it would say and it

would turn out that they in fact they're

producing exactly what those kind of

customers want that's why they win so

fast so that's interesting see then in

terms of the company we know that Omega

Omega is is has one of the best in terms

of sort of brand building and and equal

as we analyze equal they are good at

sort of online campaigns obviously and

statistical predictive statistics

predictive analysis in terms of what

customers going to buy based on data so

they say they have like PhDs right and

whereas Omega make it has like artists

right so it's very very different and

then the question really is okay so if

you combine obviously they're the

favorite sort of facing the same

competitive environments so I won't go

into that one so now the question is

okay so should should Omega Omega sort

of acquire equal would it be a good fit

and I would say it sort of purchase

price aside just looking at what each

has to offer the combined company looks

pretty interesting okay you take Omega

Omega which is tied for one of the

largest market shares in its segment has

reached all these major accounts eat by

picking up equal they get much larger

customer base with no overlap

okay so there's sort of no negative

synergy I guess like if we had if you

buy and cost a competitor that the exact

same account so you did you're not

actually growing right because yours

basically it's the same sale it's two

sales force reaching the same accounts

and so you may look at becomes a cost

savings play whereas here you actually

incremental I getting new accounts so

your your number of accounts goes up

significantly by the way what I'm doing

essentially you probably

get this out is every time there's a

good fit it's sort of like check one box

on the good idea list next is around

products by Omega Omega acquiring into

buying into equal they're picking up the

picking up products that they're

terrible in that the high-growth

customers really want that seems like a

good fit as well in the company

environment you know things that are

mega mega are good at are very very

different than what equals good at so

it's a net positive overall in addition

because Omega Omega has access to so

many more accounts there's an

opportunity to take these tools and sort

of use that as a distribution channel

that seems like a good fit so I might

say that you know overall acquisition

price aside just from a fit it seems

like it's a good idea the only issue I

haven't talked about yet so maybe I jump

to a conclusion too fast is around the

company itself and particularly only

really in any cases cultural stuff

becomes important actually probably the

number one reason why Fortune finder

murders don't work it's not because of

that any things I talked about it's

usually because like the people can't

stand each other right and if they can't

stand each other in the room then

usually sort of the business falls pro

so I might mention I talked about about

that as a potential issue and say you

can address some of the potential

cultural issues if that indeed is an

issue it looks like there's a potential

good fit here now the interviewer can do

one of two things okay they can either

say we'll create well let's talk about

purchase price and that becomes more of

a math case or they can say well how its

use how would you minimize the cultural

issues okay and that might be more of an

issue around expanding around in the

company part of this framework the

organizational structure so is there

something you could do as

organizationally to minimize that so if

the cultures are very different for

example you might have my size well

maybe you want to just keep them apart

let's I haven't share offices right and

it can be sort of an independent arm

with more of a arm's length relationship

if the culture fit is better you might

want to merge them so those are sort of

some different branches you could go to

I haven't seen that happen too

too much this is usually where we're the

most common variation on this is a

capacity issue so it's a high fixed cost

industry let's say well given its

acquisition if it were a high fixed cost

industry what would happen to market

prices hey if you merge and consolidated

factories or whatever and then that

becomes a shift to the supply demand

framework so you can see how you know

that this example we sort of evolved

from literally every case we talked

about and the key is there's always sort

of one piece of interesting data that's

the AHA that says ok we oughta this is

we clearly go in a different direction

and that's where it tends to be the

trigger so I tend to do that intuitively

but hopefully it mentioned F time so you

can sort of get it right any questions

on that yes

absolutely both are right yes many ways

to be right not always what I might say

if I'm not sure is it looks like I would

say well it looks like this is the real

issue but just to cover my bases and ask

a few more questions just to make sure

and then I say I think you got it right

why don't we move on okay so that's

little feedback like no you got it keep

going on one waste time on that and

sometimes they might let you struggle a

little bit and then tell you to move on

so it's a variety of whatever they want

to do but generally because in a typical

actual consulting engagements there's

sort of no right answer because you need

to know all of this stuff at some point

so whether you do it on a Monday or

Thursday what's the big deal as long as

you get all by Friday so a lot of ways

to be right and that's a very reasonable

approach to - yes

so if you can consider yourself mrs.

shirt you're going to need those

customers they don't like if there's no

overlap to the point um in that

situation I would say the the benefits

to Omega Omega and its acquisition this

the value does not come from the synergy

of cross selling which may be minimal in

this case if that's the case the value

really is participating in the market

segment that's probably going to

dominate and Omega mega is being left

behind and this is a faster way to

participate in that market than to build

it yourself in general and in general

there's a general it off it varies an

awful lot you can do it a lot there's a

lot of ways to justify an acquisition

and reasons why not to do one and you

may find a situation where you don't

have that center of that particular

synergy but there's another one that's

more valuable so it might still be worth

doing so there's in terms of how you

interpret it there's no hard and fast

rule it just really it really does vary

on the situation

you