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Successful Mergers Need a Strong Business Model

Mergers represent strategic decisions for a company’s growth. They offer expansion into new markets and the ability to gain a competitive edge or acquire new technologies or skills.

To be successful they must have a strong business model, which is the blueprint for the new company’s operations and focuses on how it creates, delivers, and captures value That business model must be aligned with the goals and objective of the long-term strategic plan.

In one case, the new company was formed by a merger of three metal forming companies under the direction of a private equity firm. The challenge was to develop a product business model that would achieve the corporate goal of 10 percent CAGR through value-added products.

A team leader with extensive engineering and marketing background was given the challenge to develop and execute a product strategy within nine months that would harmonize the new company and complement our core products. He put together a team of 12 individuals from across functional departments that would conduct extensive market and competitive analysis that pointed towards three focused product groups.

The team studied the products’ potential growth and profit, maturity and the customer value proposition along with how their recommendations dovetailed with the long-term strategic plan.

Resources were redeployed or added within the targeted product groups and the product campaign was launched.

Within three years after the inception of the new products, the company increased its annual revenue from $1.5 billion to $2 billion over four new product lines the team identified.

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