Scott Moeller, coauthor of a book on the use of business and military intelligence in M&A deals and CEO of Executive Education at Cass Business School in London, England, points out that Scenario Planning can be helpful in thinking about M&A deals. Exactly so.
Scenario Planning is "fractal." It can be used to address risk and uncertainty at the product, business unit, and corporate levels. Understanding possible trajectories for industries, markets, portfolio companies, and possible acquisition targets enables CEOs and Directors to evaluate possible futures and to choose their most desirable future and identify the key events and milestones leading to that future.
Sometimes it's useful to look a the future of the key business units and then at the future of the company and its portfolio of companies. Such a sequence of Scenario Planning projects can help the CEO and Directors approach acquisition and divestiture using more rigorous tools to evaluate many possible outcomes.
For example, one project for a Fortune 500 company convinced the CEO that he should sell a particular business unit because the competencies needed for success were fundamentally different than his other portfolio companies. His principal businesses essentially required making bets on 30 year capital investments in manufacturing plants where technologies evolved slowly. The business sold required competence in managing in markets whose technologies and structures were rapidly evolving.