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Mastering M&A: Key Strategies for Target Screening Success

Mastering M&A: Key Strategies for Target Screening Success

15 December 2023

Mergers and acquisitions done with the purpose of achieving strategic goals, such as market expansion, are common ways to achieve business growth and long-term success. Be it with the intention of streamlining operations, coming up with new product lines or combining technologies, strategic mergers and acquisitions are commonplace in fast-moving industries such as information technology and media.

In order to find suitable candidates for mergers and acquisitions, most firms rely on target screening. Effective target screening can enable businesses to find better compatible entities to collaborate with or acquire. The process of target screening consists of many steps, some more crucial than others. 

With that said, extra attention should be paid to these specific steps when it comes to conducting an effective and fruitful target screening process.

Define Strategic Objectives 

Clearly outline the strategic goals and objectives for the merger or acquisition. Determine what the acquiring company aims to achieve through this process, such as expanding market share, entering new markets, developing technology, or diversifying product offerings.

Many mergers and acquisitions are proposed with the intention of meeting strategic objectives on both sides. Acquiring companies should clearly define their goals, facilitating the effective management of expectations. In this process, it is crucial to include shortlisting the target list and screening targets to progress toward a successful deal.

  • Price Range: Determine the budget for the acquisition.
  • Size Range Preferences: Outline the desired size of potential acquisition targets in terms of market capitalisation, revenues, net asset values, etc.
  • Profitability Requirements: Establish criteria for EBITDA/EBIT, net margin, and free cash flow.
  •  Shareholding Preferences: Clearly define the desired level of control, specifying criteria for majority or minority shareholding.
  • Transaction Structure Preferences: Decide on the approach—whether it involves shares, assets, or special acquisition vehicles.
  • Management Team Requirements: Consider leadership style, expertise, adaptability to change, cultural fit, and post-transaction management strategy.

Additionally, set criteria related to operations:

  • Marketing Criteria: Evaluate product lines, customer base, brand reputation, geographic presence, and distribution channels.
  • R&D Requirements: Assess licenses, patents, R&D centres, product pipelines, and R&D expenses.
  • Production Criteria: Examine facilities, labour supply, production techniques, and capacity. 

Evaluate the quality of an acquisition target across various dimensions:

  • Strategic Fit and M&A Dimension: Scrutinise whether Ansoff’s Matrix is fulfilled.
  • Product/Service Fit
  • Reasons to Acquire
  • Company Turnover and Profitability
  • Integration Complexity: Consider culture, locations, product/service complexity, and integration into existing operations and culture.
  • Future Growth Expectations
  • Expected Synergies and Potential for Long-Term Value Creation
  • Feasibility: Assess the general perceived ease of completing the deal.
  • Timing: Determine if the current timing is optimal for pursuing a target.

To refine the screening process, it is essential to consider key criteria for evaluation. In particular, focus on aspects such as financials (revenue), shareholder details, and M&A records. SPEEDA provides a valuable resource for accessing critical information in these areas, enhancing the depth and precision of the screening process.

Conduct Industry and Market Analysis

Industry and Market Analysis is an indispensable step for businesses to seek potential targets during screening. By pinpointing the most suitable candidates regarding their position in the competitive landscape and growth prospects, a firm looking to strategically merge or acquire can better understand the challenges faced and opportunities uncovered, along with any industry trends a business can ride.

Competitive Landscape Assessment

  • Identifying Key Players: The analysis helps in identifying the major players in the industry and understanding their market share, strengths, weaknesses, and strategies.
  • Competitive Dynamics: Examining how competitors interact in the market, their pricing strategies, product differentiation, and innovation provides insights into the competitive dynamics of the industry. 

Growth Prospects

  • Market Trends and Forecasting: By analysing current market trends and forecasting future developments, a firm can assess the growth prospects of potential targets. This involves studying factors such as technological advancements, consumer preferences, and regulatory changes.
  • Emerging Markets: Identifying emerging markets or segments within the industry can highlight new opportunities for growth and expansion.

Challenges and Risks:

  • SWOT Analysis: Evaluating the strengths, weaknesses, opportunities, and threats (SWOT) of potential targets helps in understanding their internal capabilities and external challenges.
  • Risk Assessment: Identifying potential risks, such as economic downturns, regulatory changes, or technological disruptions, allows the acquiring firm to develop risk mitigation strategies.

Industry Life Cycle Analysis:

  •  Understanding Development Stages: Different industries go through various life cycle stages, such as introduction, growth, maturity, and decline. Understanding where the industry stands in this cycle helps predict future trends and potential challenges.

Strategic Fit:

  • Alignment with Business Goals: The analysis helps evaluate how well a potential target aligns with the acquiring firm’s overall strategic objectives. This includes assessing whether the target complements existing products/services or provides entry into new markets.

Synergy Identification:

  • Operational Synergies: Identifying areas of operational overlap and potential synergies helps maximise efficiency and cost savings post-merger or acquisition.
  • Cultural Fit: Assessing the cultural compatibility between the acquiring and target firms is crucial for successful integration and long-term sustainability.

Financial Performance:

  • Financial Due Diligence: Scrutinising the financial health of potential targets involves analysing their balance sheets, income statements, and cash flow. This ensures that the acquiring firm is making a sound financial investment. 


Valuation tools play a pivotal role in the target screening process. Beyond merely understanding the industry or market overview, these tools offer a detailed examination of a company’s financial health and intrinsic value. By utilising a valuation tool, a firm can delve into crucial aspects such as cash flow, assets, and liabilities, gaining a comprehensive understanding of a company’s worth. This nuanced approach goes beyond surface-level assessments, providing a more profound insight into potential targets.

One of the ways to best successfully conduct industry and market analysis is to ensure good data collection. With many business valuation software available for usage, deciding which platforms to consult can be challenging. It is essential to select tools that align with one’s analysis needs and enhance the accuracy of assessments. These tools can assist in streamlining data collection processes, ensuring that the information gathered is thorough and reliable for informed decision-making.

Moving beyond valuation tools, researchers scrutinise macroeconomic factors shaping the industry to understand the market’s potential for investment. The assessment of market trends, growth paths, and the identification of crucial financial players offer essential insights for evaluating investment opportunities. This evaluation process can be accomplished through the examination of market reports from diverse sources or by leveraging expert networks, like SPEEDA, to gather relevant information from industry specialists. 

With sufficient data gathered, businesses must now evaluate their merger and acquisition prospects in order to gleam further insights and explore future opportunities. With the right deal structure centred around fairness and mutual benefits, your firm is sure to strike a deal aligning with the original objectives.


Target screening is an intricate and calculated process meant to expose weaknesses and reveal opportunities that provide helpful insight into the prospects a new merger or acquisition brings. Explore the nuanced landscape of mergers and acquisitions by adopting a thoughtful approach to target screening. For professional firms seeking comprehensive insights, consider leveraging SPEEDA, a platform renowned for its reliability among industry leaders.

SPEEDA is an Asia-focused business intelligence platform designed to provide valuable, up-to-date information sourced from a diverse range of private company data and industry reports. With over 3,000 proprietary reports from regional analysts, the platform offers in-depth insights into market trends, value chains, key players, and regulatory landscapes across diverse markets. Beyond traditional valuation tools, SPEEDA’s researchers analyse macroeconomic factors to understand the industry’s potential for investment. 

Explore the possibilities with a tool that offers a balanced perspective, helping you identify both weaknesses and opportunities in your new merger or acquisition prospects. Consider incorporating SPEEDA into your strategy for a well-rounded and informed decision-making process.

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