M&A – Venture Investing
The company came to realize that organic growth alone doesn't give their business the edge to sustain competitive advantage and increase shareholder value. The acquisition of a specific startup is supposed to open new revenue streams for our client, a listed industrial company, generating revenue out of the plastic industry. For this specific customer, his hardware type of revenue starts declining, under pressure by low cost competition. The executives agree that inorganic efforts require a clear methodology to ensure success. The startup’s business model is anticipated to pave the way from the initial value proposition towards solution based model generating recurrent revenues. The risk here is that the mismatch of culture, process, and incentives may strangle the newly acquired innovation culture.
Problem description
The executives in charge of the M&A are aware that the success of this venture investment is bound to the success of the integration of the startup into its new environment: the acquirer's strategy.
The red danger zone lies in the 100 days post merger, where two very different corporate cultures need to be mutually understood, prepared and adapted for a successful integration.
Large organizations are executing and protecting the legacy. The risk here is that integrating innovation without understanding the customer problem can result in solutions that miss the target.
The executives selected to work with Advanced Value Global as an external and unbiased partner, to support its inorganic strategies in order to accelerate growth with confidence. The seniority of its consultants, our Due-Diligence Framework together with the mix of experiences, from large companies to startups, provides the legitimacy to work at the hinge between those two different entities.
Solution delivered
The solution consisted is organizing the post-merger strategy along with the executives and derive it into a plan.
Among the tools used to execute is the animation of workshops to identify the gaps of procedures in areas like Finance, IT, Reporting.
With a clear assessment of the differences, a clear understanding of their purpose, it became possible to understand how to maintain the startup’s agility and creativity in such a way as to provide value for the parent company.
Results
Preparation of a post-merger integration plan, integration of specific procedures, building a value creation program that goes past the 100 days to ensure all initiatives and objectives are tracked and followed, preparation of a meaningful set of KPIs in place to follow-up on the integration. The startup remains a platform of innovation, the parent company operating as its financial and sales platform.