Our client was a leading global investment house. They identified an opportunity to acquire a British manufacturing company in a relatively mature industry, and to merge this with a foreign company in the same industry. The two were top players among the top five competitors in Europe and it was felt that they were an ideal match – they had broadly complimentary products and markets, and could reduce costs by combining procurement, production and administration.
However, views differed on the scale of the upside created by the deal and detailed information on these companies and on their industry was hard to get. They asked McKinsey to help.
Our team was faced with the overall question of whether our client should do the deal. We disaggregated this into three issues:
How attractive is the industry?
What is the position and potential of the British company, and of the foreign player?
What scale of synergy could be achieved by the merger?
