M&A Matchmaking: “It’s Not Just About Scale, it’s About Certainty”

The FT has been tracking the recent wave of M&As within the food & beverage sector, looking for a common denominator in these deals. However, the FT argues that instead of the motivation to ‘scale’ acting as the catalyst for an acquisition, these deals have been motivated by a longer-term ambition – the certainty of the company’s future success.

But this ambition of longevity does not only appeal to the F&B sector, it extends across numerous sectors. In this blog, we look at several different M&A deals that have taken place across different sectors and how the coming together of these businesses has provided much more than just ‘scale’ to companies’ offerings. These examples explore deals that have been brokered to deliver certainty, whether through strategic synergies, international expansion or innovation.

1. AB InBev and SABMiller – Strategy Alignment

According to Euromonitor, trends in US beer drinking have shifted from high-volume consumption to high-value consumption. This has meant that mid-price and economy lagers have been losing market share to pricier craft beers. The change in trend within their major markets has stimulated action from global economy beer brewers, AB InBev and SABMiller, prompting them to agree to join forces due to their strategic synergies.

InBev has a well-honed integration strategy and SABMiller has emerging markets capabilities. This means that knowledge sharing between the two firms could offer a good opportunity for InBev’s integration template to be used within the context of SABMiller’s emerging markets unit to drive expansion and the growth of the business within new markets.

2. Mid-Tier Law Mergers Offer a Competitive Edge – Specialisation and International Expansion

Like many firms during the recession, mid-tier law firms felt the pressure faced with high levels of competition for new business. According to new research by Deloitte, since 2008 a spate of mergers has taken place between mid-tier law firms as they battle to win client work. This M&A activity has helped bolster earnings across the board as it provided firms with the opportunity to become specialists, resulting in pressure relief and improved growth rates across the sector.

Furthermore, firms that have merged reportedly found it easier to invest in an international network and have benefited from leveraging lateral hires to help win new business.

3. Google’s Acquisition of Jibe Mobile – New Capabilities / Intellectual Property

The two examples above illustrate M&A activity that seeks to secure certainty as a response to a changing environment. However, many other examples are proactive. Google’s M&A activity is an example of this, it seeks to remain ahead of the curve through the acquisition of start-ups with promising and innovative IP within its sectors.

Jibe Mobile is the latest Google acquisition, a messaging start up that builds cloud communications for mobile operators, allowing carriers to deliver rich IP-based communications services, including high-quality video calling, group chat and large media-file sharing to any network, device or region.

The acquisition will open up a wealth of knowledge that will help Google to achieve a new initiative purpose that will see the company move away from SMS and toward Rich Communications Services (RCS).

Each M&A that takes place is different and occurs for a whole host of strategic reasons for the buyer and seller. Benchmark International has huge experience working worldwide in many markets to provide certainty for all parties through bespoke strategies for companies looking to sell. To find out how Benchmark International can provide you with the right strategy for the future of your business, contact us today.

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