As sunset follows sunrise, divestitures are a natural part of the M&A lifecycle for large corporations. In 2021, there were divestitures globally worth over $2.1 trillion in deal value. Most large companies are doing ongoing or at least regular reviews of their portfolio of acquired businesses.

Knowing what steps to take and who to involve along the way is critical in order to stand out among other buyers, assess value alignment early, and gather support for the deal thesis. In this ebook, learn from Michael Frankel, founder and managing partner at Trajectory Capital, an investment firm that focuses on growing businesses. Michael will refer to decades of M&A experience to walk us through the basic steps involved in sourcing a target to getting them to sign the LOI/IOI

Once venture capital-backed startups themselves, today’s tech giants know a thing or two about VC seed money. It’s fitting that many of them have created corporate venture capital groups of their own. These CVCs help their owners experiment and nurture new technologies and ideas in the early stages, without requiring the commitment of an acquisition.

The human brain is an amazing machine. Your brain represents on average about 2% of your body’s weight but uses 20% of your total energy and oxygen. Your brain has 100 Billion neurons making 1 Quadrillion connections. It’s the most amazing processing engine the world has ever known. But even your brain has dramatic limitations. It can only process data it has – and in most situations, your brain has a very small portion of the available data with which to make decisions. It has therefore developed some nifty tools to help it take certain shortcuts to arrive at appropriate conclusions.

Looks like meditation and mindfulness is the new black. Like Yoga, organic gardening and EST (dating myself) there is always a self-help or personal development trend rearing its ugly head and eventually jumping the shark (usually when you can get it at a fast-food place or it becomes a theme on NCIS). I remember when single malt scotch was a fairly quirky drink preference and it was cheap. Then it became the thing and everyone was drinking it.

A huge amount has been written about both the fundamental efficiency of the market, and the fatal flaw in that efficiency assumption brought on by the human element. The realization that a company is not a sentient being, but a collection of individual humans in an organizing construct....but still acting primarily as individual humans act.

Human beings are creatures of inertia. If you are a well-paid and generally comfortable corporate executive, you may tolerate evolutionary change but revolutionary and disruptive change will generally......freak you out. So the innovator has a dilemma.

In most companies any large capital investment, whether it’s a large organic build or an acquisition, requires a fairly detailed business case that includes long term financial projections. Some companies run the projections out for a defined period of time (often 5-10 years) while others dictate that the projections run through and past the point where the investment pays back. There are different measures of return on these investments including payback, IRR, scale and/or growth targets. Some of these financial models are incredibly detailed “bottoms up” projections while others are more high level views based on a limited number of driving assumptions. But one thing is true of all these financial models. They’re wrong.

As we pass a full decade of strong market performance I find it interesting to reflect on the decision-making process for M&A. It strikes me that you have a dual adverse incentive when you combine a CEO or GM with a corporate development leader. The CEO is always looking to grow their business. By definition almost being the CEO of something bigger is better. There are many paths to growth but M&A can look deceptively easy. The beautiful shortcut that doesn’t require years of product innovation new market expansion hiring and operational excellence.

One of the fundamental challenges of innovation is that you are trying to predict the future and do so in situations where the future will vary substantially from the past. Gathering and analyzing historical data can be helpful but it usually doesn’t reveal a complete picture and sometimes can even send you astray.

Great analysis of M&A trends by the Deloitte team. Couple of observations I would make (personally - not representing Deloitte or the M&A Services team).

The term hybrid is now commonly associated with cars like the Prius. But really the term just means merging two separate things together to create something better. I believe the market is going to see a lot of hybridization over the coming years. Things coming together either because they create something better or because the complexity or challenge of one of the things requires the other one.