1 of 5

M&A and Alliance Activities

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Identifying the value of growth, should we

    • Build
    • Borrow
    • Buy

2 of 5

Balanced Portfolio of Growth Strategies

  • At every stage of product and business model development:
    • Do we build it internally?
    • Do we buy what is needed?
    • Do we link with someone to borrow what is needed?

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Borrow

(Alliances)

Buy

(Acquire)

Build

(internal

growth)

Strategic

Alliances

Merger/

Acquisition

Internal

Growth

$20 B

Time

Sales

$60 B

3 of 5

Tailor Your Growth Strategy

Internal�Growth

M&A

Alliance

Pros

Cons

Internal

Growth

∙

Strengthen Internal

Capabilities

∙

Tailor Growth to Needs

∙

Control Assets &

Technology

∙

Maintain Core

Competencies

∙

Expensive

∙

Time Consuming

∙

Value Capture Delayed

∙

Uncertain Success

∙

Limited Expansion/Growth

∙

Competitive Disadvantages

Merge or

Acquire

∙

Quick Entry into Similar

Business/Geography

∙

Proven Capability

∙

Product differentiation

∙

Reduce Supply/Demand

Interruptions

∙

Expand Competencies

∙

Large Cash Outlay

∙

Massive Integration Challenges

∙

Uncertain Regulatory Approval

∙

High Risk

∙

Complex Deal Negotiations

∙

Disruptions from Simultaneous

Acquisitions

Strategic

Alliance

∙

Quick Entry into New

Business/Geography

∙

Proven Capability

∙

Shared Risk

∙

No Acquisition Premium

∙

Multiple Alliances Possible

∙

Expand Competencies

∙

Change Positioning

∙

Value Chain Leverage

∙

Shared Reward

∙

Governance Challenges

∙

Must Define Performance

∙

Lack of Attention

∙

Portfolio Management Challenges

∙

Control Difficulties

Internal Growth

M&A

Alliance

Risk

Speed of

Expansion

Resource

Availability

Similarity

Change in the

Environment

Make

Low

Slow

High

The Same

Slow

Buy

Low to

Moderate

Moderate

High to

Moderate

High

Similarity

Moderate

Ally

High to

Moderate

Fast

Moderate to

Low

Different

Extensive

IF

THEN

4 of 5

A Company has a Range of Alliance Options

Strategic�Relationship

(Asset Integration)

Tactical

Trans-actional�(Asset�Exchange)

Mergers &�Acquisitions

Spin Out-Spin In�J V

Equity �J V

Strategic�Partnership

Strategic�Integration

Exclusivity, Trust, Control, Risk &Reward

Strategic Spectrum

Preferred OEM Suppliers

Vendors & Commodity Suppliers

  • Minority Equity Ownership
  • Technology Systems Integration
  • Value Chain Reengineering

Strategic

Sourcing

  • Distribution & Sales
  • New Market Development
  • Shared Core
  • Exclusive Strategic Supply
  • R&D, Exploration
  • Joint Production
  • Marketing
  • Distribution & Sales

Customer

Alliances

  • Exclusive & Specialty Products
  • Service & Support
  • Co-Location of Personnel

Collaborative�Relationships

  • Co-Production
  • Co-Promotion
  • Cross-Licensing
  • Collaborative R&D
  • Teaming and Joint Bidding
  • Exit an Industry, Segment,� or Market

Alliance Zone

The Best Companies Know which Form toChoose for Optimum Performance

Internal�Growth

5 of 5

Process to Find Candidates

Strategic

Potential

Partner

Operational

Potential

Partner

Tech or Market

Potential

Partner

“Short List”

of Candidates

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X

​

Y

“Go/No Go”

“Go/No Go”

US

US

US

Tool-Kit