Experience Due Diligence

Experience Due Diligence is the name of a customer-centric framework designed to validate and test mergers and acquisitions deals.

Innovative
STUDENTS INVOLVED
Samuel Rueesch
Deepu James
ABOUT
Partnership with London Business School and a startup in the music and entertainment industry
About the Project
While mergers and acquisitions (M&A) deals are central to how corporate finance works, they have a significant probability of failing. Throughout this project, I tried to understand and test if applying service and human-centered design methodologies to M&A due diligence could help to appraise deals that create long-term value for share and stakeholders. The project consists of a new process exclusively designed for M&A transactions, and a case study where the process was applied on an acquisition consulting project for a London-based startup in the music and entertainment business. Disclaimer: The following project is under a non-disclosure agreement, thus confidential details were excluded from the portfolio presentation. For more information, please contact me directly.
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Why M&A Could Benefit from Service Design

"Mergers and acquisitions" (M&A) is an umbrella term that describes the consolidation of assets or companies. M&A constitutes a central part of modern finance, where the approximate yearly global value of M&A activity is around 2.8 trillion dollars. Whilst this number is impressive, the majority of these deals fail to create added value to share and stakeholders. According to extensive research presented by the Harvard Business School, more than 70% percent of deals fail. There are a myriad of potential reasons for this staggeringly high failure rate, ranging from culture unfit between companies to lack of strategic understanding.As a service design practitioner, realising this deep-rooted issue in M&A, it is obvious to hypothesise if our practice could be used to come up with more successful M&A deals. This inquiry was exactly the core challenge of this project.

Service Design Applied to M&A

The way a mergers and acquisitions process functions is profoundly different from a typical service design process. Thus, it was fundamental to adapt the typical double-diamond framework to M&A. As shown below, the adapted process—coined “Experience Due Diligence Process”—is divided into three parts. In the first one, we try to create a customer-centered acquisition strategy. As the initial step in M&A, the key here is to create a clear strategy of what type of strategic acquisition could add value to our customers. In the second step, we try to find potential target companies to acquire that can solve the needs and pain points of the customers in question. Finally, in the third step, we use speculative design tools to come up with multiple post-acquisition scenarios in order to visualise and create a “tangible” narrative around an acquisition plan. This step could clearly benefit the decision-making process of an acquisition.

Experience Due Diligence in Action

To better understand if the “Experience Due Diligence” process presented above is actually beneficial, we partnered up with a London-based startup/scaleup in the music and entertainment industry. The client asked us to find a potential strategic acquisition that could add value to their core business and their customers—their customers primarily being emerging musicians.The team consisted of a couple of MBA students from the London Business School that primarily covered the financial aspect of the project and a service design student from the Royal College of Art—the writer. This multidisciplinary team was the perfect test to assess the utility of adding design practitioners in a mainly financial-focused field such as M&A.

Start with the Customers

Different from how M&A due diligence is typically being performed, we started with primary research, ergo going directly to the client’s customers—emerging artists—and creating a solid understanding of their needs and pain points. We summarised the information into a customer lifecycle (see image below) that acted throughout the project as a guide to spot needs and intervention opportunities in regards to an artist’s career stage. By adopting this working process, we were able to detect three major opportunity areas for the client. Mainly, fan activation, content creation, and artist management.

Building Post-Acquisition Scenarios

After defining the areas of interest for the client, we selected companies that directly address the major pain points and needs discovered previously in the research phase. But not only that, by adopting a variety of future thinking methods, we created scenarios of how a post-acquisition strategy could look like. The scenarios were comprehensively summarised in a simple tool shown below that enabled us to present them to different stakeholders and collectively decide which target company might create the most value for the client.The most interesting company to acquire was then thoroughly re-evaluated, and a more detailed scenario was created that consisted of a detailed storyboard, digital prototypes, and a more advanced evaluation process. The scenario was then presented to the client's executive board. Key decision-makers thanks to our work are now able to confidently decide what companies are in pole position to be considered for a strategic acquisition.

special thanks

students involved on the project

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