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Using mergers & acquisitions to achieve strategic objectives

Consumer goods and services companies are turning to M&A strategies to address key challenges and improve performance.

Overview

In this paper, Accenture explores how consumer goods and services companies are turning to mergers and acquisition (M&A) strategies to address key industry challenges and market trends, and pursue market leadership through constant re-evaluation and realignment of their product portfolios.

Specifically, we review three areas in which high-performance businesses in the consumer goods and services industry excel: strategic category leadership, consumer focus, and flexible, low-cost operations.

We also discuss how consumer goods and services companies are using buy-side and sell-side transactions to improve their performance in these areas and meet investors’ increasingly demanding expectations.

The consumer goods and services industry—whose primary product categories are household, personal care, and food and beverage—constantly evolves to address market and customer trends while positioning itself for future growth and profitability. 

Consumer goods and services companies have been forced to re-evaluate their product lines, operating models, and target markets, seeking to align their portfolios of businesses and products to recover from recent industry challenges and pursue high performance in the future.

In order to achieve high performance, consumer goods and services companies must do more than improve on their existing businesses to satisfy investors—and that goal can be achieved through M&A. It allows companies to close the gap between their current financial performance and where investors expect them to be. M&A can help consumer goods companies substantially improve in strategic category leadership, consumer focus, and flexible, low-cost operations, either by expanding upon existing capabilities or by acquiring entirely new capabilities that can help the company achieve its growth goals.

Historically, it has been a rather fragmented industry, with only a few clear category leaders that dominate globally. However, recent years have brought changes to the dynamics of this landscape. Most significantly, a US economic recession has strongly impacted all industries.

Analysis

How does M&A help consumer goods and services companies improve in the areas that drive high performance in this industry?

  • Strategic category management. M&A can help by providing “bolt-on” acquisitions that generate instant strategic value through revenue and cost synergies. To excel in strategic category management, companies should also make global trade-offs to build business rapidly.

  • Consumer focus. M&A can help companies with a strong consumer focus to respond quickly and effectively to dynamic consumer trends that could potentially disrupt their existing product portfolios.

  • Flexible, low-cost options. With the increased focus on value in the wake of the global recession, consumer goods and services need to build flexible, low-cost operations to help them offer superior customer value and respond to changing customer demands. M&A can be a powerful way to access this capability.

M&A offers consumer goods and services companies a way to keep up to speed with a business environment that is increasingly dynamic and competitive. It allows them to exceed their internal capabilities by tapping into what other leading firms in the industry can offer. No wonder, then, that for leading global consumer goods and services companies, M&As are an increasingly important element of high performance.

Authors

Larry Thomas leads Accenture’s Consumer Goods & Services Consulting group in North America and specializes in the development and execution of business strategy and technology strategy projects. He has over 15 years’ experience working with clients across a wide range of industries, including professional services, consumer packaged goods, media, and retail. Over the past several years, he has successfully led major transformational change programs including strategic due diligence, merger integration, sales & marketing transformations, global cost reduction programs, development of innovative IT Strategies and large-scale ERP implementations. He is based in New York.

Thomas J. Herd is the managing director of Accenture’s North America Mergers & Acquisitions group. He has 15 years of consulting experience in industries such as energy, chemicals, metals, forest products, government, life sciences and consumer products, and he has assisted with more than 35 M&A engagements. He has also written numerous articles on achieving success through many phases of the M&A lifecycle. He is based in Chicago.

Ken Dickman is a senior executive in Accenture’s Operational Strategy group and leads Accenture’s Consumer Goods & Services Strategy group in North America in addition to Accenture’s Consumer Goods & Services Marketing and Sales Transformation client offering. 

With 16 years consulting experience and more than 19 years of strategy development and implementation experience, he focuses on increasing growth for both consumer goods and retail clients via organic growth initiatives that develop and implement growth strategies and value-based transformation programs that build the marketing, sales, category management, merchandising and supply chain capabilities. He is based in Chicago.

Joey Lanius is a senior executive who leads Accenture’s Manufacturing Operations Offering. He has successfully managed multiple corporate wide improvement and operations transformation initiatives in the automotive, chemical, consumer products, transportation, packaging, food and metals industries. He has a broad background developed through key leadership roles including Operations Management, Operations Integration Lead, Engineering Management (Design, Manufacturing & Packaging) and Lean Six Sigma Deployment. He is based in Dallas.

Natalie Francis is a consultant in Accenture’s Management Consulting Products Strategy group. Her consulting experience spans a broad client base within the consumer goods and services and retail industries where she specializes in leading clients through development and implementation of growth strategy, operating model design, and sales and marketing transformation strategy. She is based in Chicago.