Article · May 31, 2024

M&A trends: the secrets of a successful M&A strategy

External growth as an acceleration lever

Travelsoft, Amex GBT, CDS: recent travel tech deals show how external growth builds critical mass. The four phases, from preliminary assessment to post-merger integration.

High-growth companies use external growth - M&A - as an essential lever to consolidate their activities and adapt to a new industrial landscape. That transformation has become an additional lever, and sometimes a necessity, to sustain a faster pace of growth. Recent deals in travel and travel tech illustrate the phenomenon well.

Travelsoft has integrated Traffics, Travel Compositor and Eventiz, and more recently three further acquisitions - TravelgateX, Atcore Technology and Travel Connection Technology - to reach critical mass with global coverage. Diversifying its offer and adding technological capability gives it a competitive advantage, allowing it to propose a wider range of innovative, tailored solutions worldwide.

American Express GBT recently acquired CWT, subject to regulatory approval, and Egencia, consolidating its position as international leader: a broader palette of offers across all client segments, a larger geographic footprint, greater negotiating power with suppliers and additional efficiency gains.

CDS acquired CRC and Goelett to deepen its offer and strengthen its European leadership in business travel. By combining these entities, CDS can cover new markets, diversify solutions for agencies and corporate clients, and transpose best practices to new countries.

1. Preparation and preliminary assessment

As these players have shown, an external growth strategy makes it possible to acquire new skills quickly, enter new markets and strengthen a competitive position. Whether the aim is to increase revenue, extend geographic reach or diversify the product offer, the strategy must fit within the company’s overall strategy, defining the levers targeted through predefined assessment criteria.

A preliminary review helps confirm the target’s potential value contribution against those levers, and the points to dig into during due diligence: general financial picture and additional contributions, product fit in the market, assets on which growth can be built (human, technological, trading), reputation and a first read on cultural compatibility.

2. Due diligence

Due diligence is a critical stage: it targets and assesses in greater detail the strengths, weaknesses, risks and opportunities of the company in question, to establish that the acquisition is viable and to determine its real and projected value. Four perimeters are generally analysed.

3. Negotiation and deal structuring

Once due diligence has confirmed the potential, negotiation can begin. The terms of the acquisition need to be established: purchase price, payment terms, warranties and indemnities, transition period and conditions precedent. Three key stages structure the process: the letter of intent, setting out the main terms and intentions of the parties; the signing of the definitive agreement; and the closing, finalising the transaction once conditions precedent are satisfied, including asset transfer and payment.

4. Synergies and integration

Integrating the acquired structure into the acquirer’s operations, systems and culture is a crucial stage, requiring a detailed action plan and participants defined upstream. The aim is to have a plan ready to execute on day one, with transition governance and predefined teams who already know each other. It is worth noting that merging into a single entity is not always necessary: sometimes keeping entities autonomous preserves specific synergies and maximises the benefits of the acquisition.

Continuous assessment ensures strategic objectives are met and the acquisition delivers the expected value, tracked through predefined indicators: commercial and financial performance, realisation of synergies, and decisions on adjustments to make. A new phase of growth acceleration can also result.

To optimise external growth operations and commercial acceleration, it is crucial to explore additional axes such as market expansion, entry into new customer segments and product development. An adjusted business plan, with realistic financial projections based on new growth opportunities, internal capabilities and market reality, together with targeted marketing action, is indispensable.

An article by Alexandre Veau and Flavie Picart - IMPACT CONSULTANTS.

IMPACT CONSULTANTS
← {{ t.allArticles }}
{{ current.cat }} {{ current.date }} · {{ current.author }}

{{ current.title }}

{{ current.kicker }}

{{ current.title }}

{{ b.c }}

{{ b.c }}

{{ b.c }}

→{{ b.c }}

{{ b.c }}

{{ current.excerpt }}

{{ t.readFull }} →

{{ t.more }}

{{ r.date }} {{ r.title }} {{ t.readInline }} →