Live Demo of a Mergers and Acquisition Case Interview (Part 11 of 12) | caseinterview
Summary
TLDR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
😀 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。
🤝 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。
📈 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。
💡 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。
📊 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。
🔄 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。
🎯 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。
🤔 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。
💭 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。
Mindmap
Keywords
💡并购
💡市场适应性
💡市场细分
💡竞争优势
💡成本协同
💡资产互补
💡市场增长
💡文化差异
💡客户偏好
💡产品组合
💡市场结构变化
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
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