How can you use alliance portfolio analysis in M&A strategy?

El análisis de la cartera de alianzas en la estrategia de fusiones y adquisiciones permite identificar oportunidades de crecimiento, evaluar sinergias potenciales, diversificar riesgos y fortalecer la posición competitiva. Al analizar las alianzas existentes, se pueden identificar socios estratégicos, evaluar su desempeño y determinar posibles áreas de expansión o consolidación a través de fusiones y adquisiciones. Este enfoque integral facilita la toma de decisiones informadas y la maximización del valor en las operaciones.

El análisis de carteras de alianzas es un enfoque estratégico que se centra en estudiar y evaluar las diversas alianzas estratégicas establecidas por una empresa. Este análisis implica examinar el contenido y la estructura de las redes de colaboración de una organización, identificando las relaciones y conexiones que ha establecido con otras entidades. El objetivo principal de este análisis es comprender cómo se configuran y gestionan las alianzas estratégicas de una empresa, así como identificar patrones de comportamiento estratégico en la formación de estas alianzas.

From my perspective portfolio alliance is one of the key factors for the coming years. As competition is getting more challenging, using synergies becomes more important. Due to portfolio alliances real wonders are becoming possible from joint procurement to cross selling, creating synergies and using this synergies is fundamental to generate cost reductions and growth in revenues but more importantly on profitability. Active portfolio alliances and add on deals are essential for the future years.

De manera inicial, y lo primero que debemos tener es claridad de la estrategia de negocio. Con base en esto podemos mirar la cartera de alianzas para fortalecer alguna relación actual o desarrollar algún proyecto con algún partner. Para esto debemos necesariamente priorizar las necesidades del negocio, siempre poniendo a nuestro cliente al centro, esto nos ayudará a gestionar nuestros recursos y energías. Ahora, puntualmente en el análisis de la cartera de alianzas y después de haber realizado los pasos anteriores, debemos mirar el tamaño del esfuerzo, tamaño de nuestro partner y los recursos que tiene para ayudar a lograr nuestros objetivos, esto será la pauta para poder avanzar y tener éxito en este tipo de alianzas estratégicas.

I would say it’s basic. In Venture Capital and Private Equity the alliance portfolio is one of the main factors to influence in an active way the future of your portfolio company. In many cases it may even be recommendable to acquire a platform company and in a second stage to acquire add on companies to generate synergies from procurement, product development, back office savings to cross selling. Personally I always try to focus on generating synergies between our portfolio companies and managers.

On of the big challenges if the analysis is to get the right data in time. Many times due to competition and to time lines it’s very difficult to get all the relevant data in the necessary detail that is needed to analyze to full volume of synergies. Also depending if the acquisition is more B2C or B2B, focused sometimes regional differences can be seen that one can very hardly understand or even predict. This goes from very simple things like branding, for example remember the case of Mitsubishi Pajero and the laughter it caused in Spanish speaking countries, to unexpected things like costumers who prefer to deal with someone from their region. The trick is in the details and as always to get the right person involved at the right moment

Risk Mitigation: -Diversify, Not Dive Headfirst: Use your alliance network as a safety net. By analyzing a variety of partnerships, you can spread the risk instead of putting all your eggs in one basket. -Early Warning System: Monitor the health and dynamics of your alliances to catch red flags early, preventing costly mistakes.

"Warren Buffett said, 'Risk comes from not knowing what you're doing.' Alliance portfolio analysis is key to navigating the complex landscape of mergers and acquisitions, offering strategic insight and market foresight. It enhances competitive advantage by leveraging existing and potential alliance capabilities. Moreover, it aids in value creation, identifying synergies, and streamlining M&A operations, thus reducing costs and risks. Ready to strengthen your M&A strategy? Let’s tap into the power of alliance portfolio analysis and turn challenges into opportunities."

Portfolio analysis —as any area of M&A strategies— should pursue a three-fold strategic fit objective i.e., ❶ Determine the strategic fit and amplification potential for your firm's strategic purpose. Indeed, purpose has become the fourth, ultimate, and North Star level of strategy. Therefore, M&A ultimate goal should be to strengthen your firm's ability to achieve it, which should be highlighted in portfolio analysis. ❷ Determine the potential for strengthening of current strategic advantages or for acquiring new ones. ❸ Determine whether the corporate parent of the newly merged entity has the characteristics —e.g. structure, capabilities, culture— to make the most of the newly extended portfolio.

Alliance portfolio analysis provides a structured way to assess your existing partnerships in the context of potential M&A activity. However, consider these limitations: -Subjectivity: Cultural fit and strategic alignment are hard to quantify, limiting the analysis. -Static view: Alliances and markets change rapidly. -Snapshots provided by the analysis may become outdated. -Missed opportunities: The focus on existing partnerships could blind you to the potential of new alliances formed through M&A. -Independence vs. Acquisition: The analysis doesn't account for whether a partner might function better independently or if its value would change under acquisition.