How To Justify An Acquisition Price

Mergers and acquisitions (M&A) can be driven by a variety of different objectives, ranging from strategic asset deals, to patent motivated deals, to hostile takeovers. Acquisitions that lead to the full integration of the acquired assets into an existing software or service portfolio are usually the most challenging ones, with many attendant organizational and cultural risks. While the due diligence behind these deals usually focuses on financial metrics other product development and management considerations, product marketing and sales strategy are equally critical to the success of these mergers. With this document, we introduce Forrester's M&A Value Prediction Framework for vendor strategists to complement their financial due diligence. This approach leverages the well-established scenario-planning framework and adds a predictive component for the value of the acquired company after 12 months — after the post-merger integration process is complete.