CASE STUDIES

M&A Strategy for an Industry-Leading, Independent Developer of Powertrain Systems

Apr 30, 2021

Mergers and acquisitions have been considered a strategic tool for market expansion for more than a decade, mainly because M&As have had a significant impact on shaping the business world as we see it today. Hence, creating a robust M&A strategy is poised to become a success criterion for automotive companies in the new normal.

But to ride the next wave of M&A, businesses must stay prepared and adopt effective growth strategies. It includes setting up dedicated M&A teams, focusing on value creation, revamping the M&A blueprint, and rethinking business priorities. Therefore, any move a company intends to take should be aligned, justified and deep-rooted in its vision and core strategy for objectives to be efficiently realized and consequently deliver the desired value to its stakeholders.

Emerging automotive industry players are poised to face significant challenges in the new normal. Speak to our experts to learn how you overcome these challenges with effective M&A strategies.

About the Client

The client is one of the largest independent developers of power train systems based out of the United Kingdom. With several technical centers spread across the US and UK, the company is known for developing, calibrating, and integrating hybridized and electrified powertrain systems.

As a partner to leading automotive manufacturers, the client is well-known for its expertise in developing and integrating cutting-edge power train systems and software into high-performance, production feasible solutions for future powertrains.

Business Challenge

As unpredictability becomes the new industry standard in the automotive sector, companies are looking at devising effective M&A strategies to propel growth. In such an environment, M&A strategy creation seems to be an easier way to tackle disruptions by driving market potential rather than building it from scratch.

Impacted by the crisis and rising globalization, our client was looking to explore M&A as a mechanism towards developing a global presence and increasing its market share. Given the abundance of M&A opportunities in the automotive market, the client approached Infiniti Research to leverage its expertise to create an M&A strategy that is deep-rooted in its vision and aligned to its business objectives.

To overcome their challenges, the client was focused on driving value through mergers and acquisitions. The objective revolved around rapid M&A strategy implementation to accelerate new capability, improve technology expertise, capture a fair share of the market, and gain a leading edge.

The client’s challenges included:

  • Poor understanding of the strategic growth levers
  • Ineffective integration planning and execution
  • A vacuum in governance and strategic communication

Navigating challenges and preparing for the next normal requires automotive leaders to develop a robust M&A strategy, request a free proposal to find out how we can help.

Our Approach

To help the client devise an effective M&A strategy, in-depth market research was performed. The motives behind the merger were analyzed, followed by the analysis of the industry environment, competitive landscape, post-merger integration, and performance indicators that reflect the outcome.

Our experts adopted a comprehensive research-backed approach to market assessment, which eventually led to the development of an effective M&A strategy. It included the following phases:

Assessment of internal capabilities

The initial phase of M&A strategy creation revolved around assessing the client’s internal capabilities to gauge their ability to meet M&A goals. Since the client had a small M&A team, the processes for evaluating and integrating a target company were not readily available. Hence we developed an approach backed by in-depth market research to perform due diligence, identify risks, and create a successful M&A strategy.

Evaluation of strategic goals

M&As present risks and attractive opportunities to propel growth in the automotive industry. Therefore, it is essential to evaluate an organization’s strategic goals to determine the possibilities of achieving them through M&As. To inform this decision, we established a comprehensive baseline of the business by the line of the business relative to markets served.

We connect clients to subject-matter experts who can provide tailored M&A solutions and research insights to make informed decisions. Request a free brochure to explore our capabilities.

Creating a blueprint for M&As

A blueprint to planning mergers and acquisitions helped the client chart out a clear path on how they will use the devised M&A strategy as a tool to reinforce their business priorities.

The M&A strategy also aided our client in the following ways:

  • Assistance with identifying ideal partnerships and valuable mergers
  • Expert insights on decisions regarding investments
  • A comprehensive understanding of every stage in the M&A process
  • Data-drive insights that account for the changing industry landscape and competitive scenario

Outcome

The M&A turnaround had a positive impact on business growth, enabling the client to improve brand reach and profitability. As, a result the client’s margins continued to proliferate through the first half of Q1, enabling them to surpass their profitability and cost savings targets.

Key success factors in this M&A strategy include:

  • Developed a well-defined plan to generate operational synergies
  • Identified several opportunities to extend cost savings
  • Achieved more than 2x increase in profits

How the Right M&A Strategy Can Help Improve the Outcome of Automotive M&As

Our M&A experts work with companies from different industries to deliver superior returns by developing a repeatable model tied to their business strategy.  The goal is to help them identify the right M&A strategy to take advantage of the macro trends and capital abundance impacting businesses globally.

By considering the changing industry landscape and the competitive scenario, we help businesses identify potential opportunities and meet their growth targets. To gain comprehensive insights into our M&A strategy development approach, request more information from our experts.

We help our clients make smarter decisions to achieve rapid business growth

Our strength lies in the unrivaled diversity of our international market research teams, innovative research methodologies, and unique viewpoints that merge seamlessly to offer customized solutions for your every business requirement.

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