Cyber synergies drive real-life acquisition

A leading global provider of online services requested Bain's help in valuing a critical acquisition. Bain built a comprehensive valuation model based on the target's stand-alone value, the value of synergies and the impact the deal would have on financials. The client ultimately closed a successful $1 billion acquisition, which subsequently exceeded Bain's projections for synergies and customers.

A leading online provider wanted to acquire a network services company.

CommunicateCo, a leading global provider of online services, was considering a $1 billion acquisition of ServiceNetCo, a major rival with strong capabilities in network services.

It was strategically important for CommunicateCo to own a substantial interest in a network services company to control end-to-end access for customers, ensure low hourly network costs and increase shareholder value.

Acquiring ServiceNetCo would provide immediate scale and corporate customer relationships. Moreover, ServiceNetCo's network dovetailed with CommunicateCo's daytime usage peak and would create substantial efficiencies.

CommunicateCo asked Bain to identify and value a deal with ServiceNetCo.

View Approach

Working in the United States and Europe, Bain proposed a deal structure and valued deal synergies through extensive analysis of CommunicateCo and its target.

Based on analysis and interviews with CommunicateCo's management, Bain created a complete valuation model with all relevant details, including:

Target stand-alone value
Synergy value
Required reserves and write-offs
Impact of the deal on cash flow and income statement

The team also executed customer interviews to assess both the quality of the target's business and the potential impact of combining the two businesses.

View Recommendations

On Bain's recommendation, CommunicateCo submitted a bid to ServiceNetCo and followed through on a complete strategy.