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Acquisition Marketing Due Diligence

The last few years’ merger and acquisition activity by companies around the globe has continued at a frantic pace. We expect that this activity will continue unabated, as it is often more cost-effective to buy a brand or business than build one from scratch. It is certainly a quicker route to market.

From our experience, in most instances, the due diligence activity that occurs is directed by a client’s financial department and an investment banker. The latter’s objective is clearly the effective positioning of “the sale” to the acquiring company.

At Just The Facts, Inc.™, we have found that during the “emotion of the hunt” that many critical issues are left uninvestigated. In some situations, such as the case of a large Chicago food company’s purchase of a bottled juice firm, the level of marketing due diligence was seriously flawed. On the surface, this deal appeared to be the “perfect” fit (certainly the investment bankers presented it as such!).

Titanic Disaster

The problem in the preceding scenario was the acquiring food company had not conducted effective marketing due diligence. They had neglected many aspects, such as: interviewing the distribution channel; speaking with trade members; talking with the respective marketing and sales forces to determine how the product was sold, merchandised and promoted; fully understanding the positioning and historical business building, and how the brand had become successful in the first place (to name only a few key elements).

For this well-known Chicago food company the acquisition was a disaster of “Titanic” proportions, and with similar financial results. While the juice firm was initially purchased for well over a billion dollars, it wound up being sold on the “auction block” for under $500 million. As a postscript, several key executives, including the president, eventually lost their jobs over the whole sad affair.

Acquisitions Insurance

Unfortunately, this scenario is an all-too-common event. “Fools rush in where angels fear to tread,” is an old saying that acquiring firms would be wise to heed. This is where JTF Research can assist. We come into a purchase situation, like the one described above, and turn over every stone. Our analysts dissect every aspect of the business, so the buyer fully understands the business, marketing and strategic dynamics of the target firm. The bottom line… our research efforts protect the huge investments being made, and save hundreds of thousands and millions of dollars from floating down the acquisition drain.

Just The Facts, Inc.™, think of us as your acquisition insurance policy…

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