Role of Private Equity Firms in Merger and Acquisition Transactions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Role of Private Equity Firms in Merger and Acquisition Transactions
Explores the importance of private equity firms in merger and acquisitions activity around the globe. In many countries, these firms now account for one quarter of the total merger and acquisition activity of all firms. The larger private equity firms generate fees for investment banking firms that exceed $350 million per year. Shows how the general partners of the fund financing the acquisition; the limited partners of the fund financing the acquisition; and the management team running the acquired firm for the private equity sponsor share the shareholder value creation in a successful leveraged buyout sponsored by a private equity firm.
Swot Analysis of "Role of Private Equity Firms in Merger and Acquisition Transactions" written by William E. Fruhan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Firms Equity facing as an external strategic factors. Some of the topics covered in Role of Private Equity Firms in Merger and Acquisition Transactions case study are - Strategic Management Strategies, Growth strategy, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Role of Private Equity Firms in Merger and Acquisition Transactions casestudy better are - – technology disruption, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, challanges to central banks by blockchain based private currencies,
there is increasing trade war between United States & China, increasing commodity prices, etc
Introduction to SWOT Analysis of Role of Private Equity Firms in Merger and Acquisition Transactions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Role of Private Equity Firms in Merger and Acquisition Transactions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Firms Equity, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Firms Equity operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Role of Private Equity Firms in Merger and Acquisition Transactions can be done for the following purposes –
1. Strategic planning using facts provided in Role of Private Equity Firms in Merger and Acquisition Transactions case study
2. Improving business portfolio management of Firms Equity
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Firms Equity
Strengths Role of Private Equity Firms in Merger and Acquisition Transactions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Firms Equity in Role of Private Equity Firms in Merger and Acquisition Transactions Harvard Business Review case study are -
Ability to lead change in Finance & Accounting field
– Firms Equity is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Firms Equity in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Firms Equity in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Firms Equity
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Firms Equity does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Firms Equity has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Role of Private Equity Firms in Merger and Acquisition Transactions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Firms Equity in the sector have low bargaining power. Role of Private Equity Firms in Merger and Acquisition Transactions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Firms Equity to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Firms Equity are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Firms Equity has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Role of Private Equity Firms in Merger and Acquisition Transactions Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Firms Equity digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Firms Equity has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Firms Equity is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Firms Equity has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Role of Private Equity Firms in Merger and Acquisition Transactions - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Role of Private Equity Firms in Merger and Acquisition Transactions Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- Firms Equity is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Firms Equity is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Role of Private Equity Firms in Merger and Acquisition Transactions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Role of Private Equity Firms in Merger and Acquisition Transactions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Role of Private Equity Firms in Merger and Acquisition Transactions are -
Increasing silos among functional specialists
– The organizational structure of Firms Equity is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Firms Equity needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Firms Equity to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Firms Equity is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Role of Private Equity Firms in Merger and Acquisition Transactions can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Firms Equity needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Role of Private Equity Firms in Merger and Acquisition Transactions, in the dynamic environment Firms Equity has struggled to respond to the nimble upstart competition. Firms Equity has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Firms Equity supply chain. Even after few cautionary changes mentioned in the HBR case study - Role of Private Equity Firms in Merger and Acquisition Transactions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Firms Equity vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Role of Private Equity Firms in Merger and Acquisition Transactions, it seems that the employees of Firms Equity don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Firms Equity has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As Role of Private Equity Firms in Merger and Acquisition Transactions HBR case study mentions - Firms Equity takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Role of Private Equity Firms in Merger and Acquisition Transactions, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Firms Equity has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Role of Private Equity Firms in Merger and Acquisition Transactions should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Firms Equity, firm in the HBR case study Role of Private Equity Firms in Merger and Acquisition Transactions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Role of Private Equity Firms in Merger and Acquisition Transactions | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Role of Private Equity Firms in Merger and Acquisition Transactions are -
Better consumer reach
– The expansion of the 5G network will help Firms Equity to increase its market reach. Firms Equity will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Firms Equity can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Firms Equity is facing challenges because of the dominance of functional experts in the organization. Role of Private Equity Firms in Merger and Acquisition Transactions case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Firms Equity can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Firms Equity can use these opportunities to build new business models that can help the communities that Firms Equity operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Creating value in data economy
– The success of analytics program of Firms Equity has opened avenues for new revenue streams for the organization in the industry. This can help Firms Equity to build a more holistic ecosystem as suggested in the Role of Private Equity Firms in Merger and Acquisition Transactions case study. Firms Equity can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Firms Equity can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Firms Equity can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Role of Private Equity Firms in Merger and Acquisition Transactions suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Firms Equity has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Role of Private Equity Firms in Merger and Acquisition Transactions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Firms Equity to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Firms Equity to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Firms Equity in the consumer business. Now Firms Equity can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Firms Equity can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Manufacturing automation
– Firms Equity can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Role of Private Equity Firms in Merger and Acquisition Transactions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Role of Private Equity Firms in Merger and Acquisition Transactions are -
Consumer confidence and its impact on Firms Equity demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Role of Private Equity Firms in Merger and Acquisition Transactions, Firms Equity may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Firms Equity is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Firms Equity.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Firms Equity in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Firms Equity has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Firms Equity needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Firms Equity with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Firms Equity can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Firms Equity in the Finance & Accounting sector and impact the bottomline of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Firms Equity will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High dependence on third party suppliers
– Firms Equity high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Role of Private Equity Firms in Merger and Acquisition Transactions Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Role of Private Equity Firms in Merger and Acquisition Transactions needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Role of Private Equity Firms in Merger and Acquisition Transactions is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Role of Private Equity Firms in Merger and Acquisition Transactions is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Role of Private Equity Firms in Merger and Acquisition Transactions is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Firms Equity needs to make to build a sustainable competitive advantage.
