Kellogg’s uses not only financial statements to decide on the validity of the deal, but they also consider the value that will be added by moving forward with any type of merge or acquisition. “Effective due diligence requires answering four basic questions: What are we really buying? What is the target's stand-alone value? Where are the synergies--and the skeletons? And what's our walk-away price? Each of these questions will prompt an even deeper level of querying that puts the broader, strategic rationale for acquisitions under a microscope. Successful acquirers pay close heed to the results of such in-depth investigations and analyses--to the extent that they are prepared to walk away from a deal, even in the very late stages of negotiations.”
Companies can learn from this example, in evaluating financial of the target company and to clearly identify synergies that will be created due to the acquisition.
CITE THIS AS:
YouSigma. (2008). “Kellogg’s Acquisition Strategy." From http://www.yousigma.com.