The risky nature of mergers and acquisitions is well-known, with partnerships such as AOL/ Time Warner, and Sprint/ Nextel Communications among the 83% that ultimately fail to increase value for shareholders.
Location intelligence can help mitigate this risk by providing the insights needed to make educated decisions at all stages of the process, from initial due diligence through to negotiating the deal and integrating the newly–acquired firm into your existing organisation.
What is location intelligence for mergers and acquisitions?
Location intelligence for mergers and acquisitions means visualising combinations of internal and external datasets that help you understand the performance, or potential performance, of specific sites.
It can also help identify untapped locations with similar demographics or infrastructure to your target’s best–performing sites.
Executing a successful merger or acquisition
The main advantage of location intelligence in mergers and acquisitions is its ability to yield targeted insights that help you come to a decision about whether to proceed in a quicker time-frame than would be possible by manually studying data in spreadsheets.
Deciding whether a target is a viable prospect – and if so, at what price – depends on many factors, including:
- Demonstrated growth and potential for future growth
- Products/ services/ customer groups that are profitable
- Products/ services/ customer groups that are not profitable
- Customer retention success rate
- Margins by location, product or customer group
Once a target is deemed viable, the possibility of sales cannibalisation due to trade area overlap must be considered. This is a topic that has featured in mainstream news lately, due to the acquisition of Thomas Cook by Hays Travel. The latter now has 49 locations with two stores in close proximity.
Time will tell whether there’s sufficient trade in those locations to support multiple sites, or whether closures of duplicate stores may be necessary. Location intelligence software could assist in judging whether an area can support two sites, by analysing a combination of factors such as:
- Transport links
- Population density
- Number of transactions per store
- Socio-economic data
- Customer purchase patterns
- Competitor presence
It also allows you to undertake detailed analysis of transaction-level data to help uncover each site’s operational efficiency and cashflow.
Once you have analysed this data, you can move quickly to a decision about whether to complete the deal or switch to another target.
Using Periscope® for mergers and acquisitions
Our location intelligence platform, Periscope®, can help your team make strategic decisions throughout the process of combining two formerly separate organisations in a merger or acquisition.
Periscope® is a complete data insight solution for brands, enabling you to visualise up to 200 attributes using your own secure, corporate version of Google Maps.
This intuitive software presents you with an overview of branch profitability, competitor impact and customer trends, helping you plan your next move based on actionable real-world data.
These insights can enable your team to identify suitable targets for mergers and acquisitions. Once a deal is agreed, they can also help you renegotiate supplier terms, adjust customer prices, streamline operations, develop new products and services, and measure how customers are responding to them.
Discover location intelligence for mergers and acquisitions with Periscope® from Newgrove; sign up for a free, 10-minute demo today.