SOURCE: Booz & Company

Booz & Company

September 07, 2010 11:51 ET

Right Now, M&A Should Be About Adding Capabilities, Not About Consolidation or Diversification, Argue Booz & Company Authors in Forbes.com Article

NEW YORK, NY--(Marketwire - September 7, 2010) -  Booz & Company Partner Paul Leinwand and Managing Director Cesare Mainardi have published an article on Forbes.com that urges companies to use a capabilities filter to guide a rejuvenated M&A strategy.

They argue that the deals worth doing are ones that help the company get people, processes and technologies that make the company deeper in areas that matter to its customers -- not deals that get assets, or a near-term pop in revenue. (Booz & Company research shows that M&A deals that expand and add to a business's core capabilities are significantly more successful than deals done for consolidation and diversification purposes.)

In the article, the authors make the case that the least risks and least expensive deals are the ones that...

  • Strengthen a company's distinctive capabilities, i.e., the things that combine people, processes and technologies that give a company a winning edge.
  • Add products or services that are a close fit to a company's capabilities, i.e., acquiring a firm with products and services that can be sold.

The most expensive and risky ones...

  • Help a company expand internationally.
  • Propel a company into some new area of business unrelated to its core.

The full text of the article is at the Forbes.com website. For more information, visit http://www.booz.com/global/home/what_we_think/capabilities_driven_strategy.

Paul Leinwand and Cesare Mainardi are the authors of Harvard Business Review article "The Coherence Premium" and the forthcoming book The Essential Advantage: How to Win with a Capabilities-Driven Strategy (Harvard Business Review Press, December 2010).

To speak with Paul Leinwand or Cesare Mainardi about using a capabilities filter in M&A strategy, please contact Frank Lentini of Sommerfield Communications, Inc. at 212-255-8386 or letnini@sommerfield.com.

About the authors
Paul Leinwand (paul.leinwand@booz.com) is a partner in Booz & Company's global consumer, media, and retail practice. Based in Chicago, he serves as chair of the firm's Marketing Advisory Council. He supports clients undertaking significant strategic opportunities, and in building capability systems in marketing, innovation, and customer management.

Cesare R. Mainardi (cesare.mainardi@booz.com) is managing director of Booz & Company's North American business and is a member of the firm's Executive Committee. Based in Cleveland, he works with Fortune Global 500 companies to help them achieve major business transformations. He has served as global leader of Booz &
Company's functional practices and has led the firm's global consumer products and health practices.

About Booz & Company
Booz & Company is a leading global management consulting firm, helping the world's top businesses, governments, and organizations.

Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914.

Today, with more than 3,300 people in 61 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage.

For our management magazine strategy+business, visit www.strategy-business.com.

Visit www.booz.com to learn more about Booz & Company.

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