Bain M&A Capabilities Diagnostic

Product
Contacts: Sam Rovit, John Lee, Bill
Bonadio, Adrian Jones, Michael Casaburi
2002
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.
M&A diagnostic

• Are well-defined acquisition criteria a central part of the

company’s growth strategy?
M&A strategy
• Is the NPV of an internal project measured against the
NPV of a potential acquisition?
• Are potential acquisition targets actively courted?

• How are acquisition teams structured and mobilized?

Organizational
• Are integration teams held accountable for the long-term
structure and
performance of acquisitions?
design

• How experienced are managers and integration team

Management leaders in M&A?
capabilities • Are acquisitions used to leverage best practices between
both companies?

• When are integration plans developed?

Integration • How much focus is on the base business during
planning integration?
GXC

MACapabilitiesDiag
nostic
2
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.
M&A diagnostic: M&A strategy

Level IV
• Acquisitions are clear part of growth strategy with well-defined criteria; NPV
Point of Arrival of acquisitions evaluated against NPV of organic growth
• Targets are actively courted regardless of rumors of potential sale
• If approached by sellers, pre-defined criteria are used to determine quickly
whether the acquisition is worthy of consideration
Level III
Pulling Ahead • Growth strategy defines criteria for acquisitions and costs/benefits of
acquisitions are balanced against organic growth
• Interested sellers are actively courted if the deal meets acquisition criteria
• Executives reach correct acquisition decisions after substantial deliberation
Level II
• Acquisition strategy is part of the growth strategy, but the two are not clearly
In the Game
linked
• Potential acquisition targets are occasionally courted, but not necessarily in a
targeted or strategic manner

Level I
Point of Departure • No acquisition strategy; evaluation of potential acquisitions is ad hoc
• Company is approached by potential acquisition targets and does not actively
court potential targets

GXC

MACapabilitiesDiag
nostic
3
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.
M&A diagnostic: Organizational structure

Level IV
Point of Arrival • A single core team sources acquisitions and manages their integration from
beginning-to-end
• The acquisitions team is held responsible for the long-term performance of
acquisitions
Level III
Pulling Ahead • A single Acquisition Team of sourcing and integration experts manages the
acquisition, but individuals are assigned to discreet roles
• The Acquisition Team proactively addresses sources of internal conflict
Level II
In the Game • A Sourcing Group and an Integration Group coordinate efforts, but the two
have discreet objectives and are evaluated on different criteria
• Coordination reduces, but does not eliminate, internal conflict

Level I
Point of Departure • Acquisitions are “thrown over the wall” from ad hoc sourcing teams to ad
hoc integration teams
• Acquisitions generate substantial internal conflict

GXC

MACapabilitiesDiag
nostic
4
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.
M&A diagnostic: Management capabilities

Level IV
Point of Arrival • Managers know from experience how to handle acquisition challenges
• Managers see acquisitions as part of the ongoing business; attrition is
minimal
• Acquisitions are used to leverage best practices between both companies
Level III
Pulling Ahead • Managers have managed through several acquisitions but may still need
program management office support to deal with acquisition challenges
• Managers are able to manage the base business during integration and
integrate best practices simultaneously
Level II
In the Game • Managers have observed “an acquisition or two” and know what to expect
• Acquisitions are regarded as distractions from the ongoing business
• Managers are skeptical of leveraging best practices but can be convinced to
adopt them; moderate attrition may occur
Level I
Point of Departure • Managers are inexperienced in acquisitions and do not know what to expect
• Acquisitions are regarded as a major distraction from the ongoing business
• Managers protect fiefdoms during acquisitions and do not leverage best
practices; significant attrition may occur

GXC

MACapabilitiesDiag
nostic
5
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.
M&A diagnostic: Integration planning
Level IV
Point of Arrival  Ability to integrate is a key consideration of the acquisition sourcing strategy
 Integration plans are developed during the sourcing stage, refined during due
diligence, and executed quickly upon consummation of the deal
Level III
Pulling Ahead
• Acquisition sourcing team studies key integration issues before pursuing a
deal; inability to integrate can kill a deal
• Detailed integration plans are developed before or during due diligence
Level II
In the Game
• Deals are not pursued if integration looks troublesome, although acquisition
sourcing is focused more on considerations apart from ability to integrate

Level I
Point of Departure • Acquisitions are pursued for financial reasons; integration is considered once
the deal is made
• Integration is a “brute force” process

GXC

MACapabilitiesDiag
nostic
6
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent.