Intuition
An M&A case is a high-stakes "should we buy them?" The romance of a deal — bigger, bolder, market-leading! — seduces executives and candidates alike, which is exactly why a disciplined structure matters. Buying a company is like buying a house that comes with the previous owners still living in it: the sticker price is only the start, and the real cost shows up in the years of making two things work as one.
Your job is to be the clear-eyed advisor asking why this target and is it actually worth the price while everyone else is excited.
Framework
- Strategic rationale. Why this acquisition, why this target, why now? (Access to customers, capabilities, scale, eliminating a competitor.) No rationale → no deal.
- Standalone value of the target. Is it a healthy business at a fair price? Assess its market, economics, and growth.
- Synergies. Cost synergies (remove duplication, gain scale) and revenue synergies (cross-sell, new markets) — quantified and discounted for realism.
- Price & risks. Does total value (standalone + synergies) exceed the price paid? Then integration, culture, regulatory, and overpayment risk.
Worked Example
A grocery chain considers buying a meal-kit company. Rationale: defend against home-delivery disruption and own the recipe-to-doorstep flow — plausible. Standalone: the target grows fast but loses money. Synergies: cost (shared warehousing, buying power) is real; revenue (cross-sell kits to grocery shoppers) is promising but speculative. Price: a steep premium that only pays off if the speculative revenue synergies land. Recommendation: pursue only if the price can be brought down or structured with earn-outs, because the deal's value rests on the least certain synergy. You named the rationale, tested the synergies, and tied the verdict to price — exactly the consultant's role.
Pitfalls
- Accepting the strategic rationale at face value without testing it.
- Taking management's synergy estimates as gospel — haircut them hard.
- Ignoring integration and culture risk, where most "good on paper" deals actually die.