Experience Due Diligence is the name of a customer-centric framework designed to validate and test mergers and acquisitions deals.
Samuel Rueesch
I am a passionate service designer with extensive working experience in the financial sector. I am particularly excited about applying design thinking to unconventional industries. I am also a big advocate of combing data science skills with design know-how to address complex problems.
Why M&A Could Benefit from Service Design — Mergers and acquisitions is an umbrella term that describes the consolidation of assets or companies. M&A constitutes a central part of modern finance, indeed 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.
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.
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 are primarily emerging musicians.
Start with the Customer — 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 summarized 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.
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 summarized in a simple tool shown below that enabled us to present them to different stakeholders.
Improving Decision-Making Through Scenarios — 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.
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.