Growth Thru Mergers, Acquisitions

Surprisingly, 50 percent of all acquisitions ultimately fail to add value to the shareholders of the acquiring firm. Why does this occur? When considering the full scope of due diligence, few companies perform any adequate investigation of the asset that is almost always the single most important to be understood–the customer base. This customer asset can make up as much as 80 percent of the transaction value, yet far too little attention is paid to it. Although it’s true some firms may call a few of the targeted company’s largest customers, the hope of gathering much more than anecdotal feedback is slim.

With so much market pressure to grow revenues and profits, acquisitions must generate the results anticipated. In reality, the best, most reliable customer due diligence involves an empirical approach–turning information about the customer relationship into reliable, validated, quantitative data and actionable insights.

A Three-phase approach

Walker addresses this challenge through a well-executed three phase approach:

• Phase One: Pre-deal customer due diligence. As the deal is being negotiated, we help acquiring companies understand of the target company’s customer relationships and market position. We provide an measure of the stability of the customer base to help better assess the company’s value and the potential impact of new ownership.
• Phase Two: Post-deal portfolio development. We accelerate performance by identifying and developing specific strategies for bringing the two organizations together. What’s more, initiatives for customer retention and growth are plotted in a strategic roadmap to help the company mitigate risk and enhance value.
• Phase Three: Post-deal harvesting. By monitoring and leveraging customer relationships, Walker helps companies optimize their return on investment. We never cease in our efforts to help companies understand their customers and solidify their competitive advantage.