The Friedman (3'd man) 3D model for M&A analysis includes the various threats that lead to M&A failure, and a 3D model that allows you to control for them...

1. 3
’D-man model
For analysis of
M&A
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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2. 1.
Model logic
My research and experience have shown that
there are a few distinct threats that lead to M&A failure.
By taking them into account, you can better manage a transaction,
better analyze a deal or better plan M&A execution…
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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3. 2.
Strategic & Organizational Fit
Strategic fit is focused on the compatibility between the strategies
of the target firm and the acquirer. Organizational fit refers to the
compatibility between the target and parent administrative practices,
cultural practices, and personnel characteristics. Taken together, these
two aspects of fit directly affect how the firms can be integrated as
they reflect the corporate match between the parties.
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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4. 3.
Human bias
Strategic Decisions are made by human beings, and as such,
are subject to human predisposition, prejudice and bias.
Lack of (acquisition) experience
Over-commitment to acquire
(Delusional) optimism
Overconfidence
Greed
Stupidity
Entrenchment
Executive confirmation bias
Managerialism
Empire building
Managerial hubris
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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5. 4.
Faulty decision-making processes are dependent on
circumstances, proper process planning etc.
• Faulty target selection (looking at only one potential firm…)
• Lack of agreement on acquisition goals
• Lack of planning and lack of effective process execution
• Incorrect risk perceptions and propensities
• Poor valuation and analysis decisions
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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6. 5.
Faulty integration processes
Even if all actions and decisions taken are correct
and logical, ineffective post-acquisition integration will
negatively influence performance .
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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7. 6.
Financial aspects
Wrong price or wrong mode of payment (cash / equity)
have been shown to be potential sources of acquisition failure.
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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8. 7.
Model utilization
Cell: +972-54-4536568 | Fax: +972-9-7417607 | Email: yair@friedman.org.il
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9. Find more presentations and information on
my website: www.friedman.org.il
Copyright 2014 @ Yair Friedman. All Rights Reserved
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