Common Pitfalls in Developing Target Operating Models PPT

This PPT slide, part of the 32-slide Mergers and Acquisitions (M&A): Target Operating Model (TOM) PowerPoint presentation, outlines critical pitfalls and lessons learned in developing a Target Operating Model (TOM) during the integration of 2 organizations. It emphasizes the importance of a clear vision and rationale for the deal, which are essential for the success of the TOM. Without these elements, the future business model may falter, leading to ineffective integration.

The slide identifies 6 common pitfalls. The first point stresses the necessity of a well-defined integration or joint venture blueprint. This blueprint must articulate the vision and deal rationale clearly, serving as a foundational element for a value-generating TOM. The absence of such clarity can lead to misunderstandings and misalignment between the organizations involved.

The second point highlights the value of including the target and various workstreams in the TOM development process. This inclusion helps mitigate erroneous assumptions about the business model and organizational structure, fostering a greater acceptance of the proposed blueprints. Sufficient time should be allocated for this collaborative understanding.

The third point addresses the interim operating model that may emerge during the pre-closing phase. It warns that this model can diverge significantly from the final approved TOM due to limited access to buyer-side information. Therefore, a review of assumptions based on the interim model is crucial as the transaction progresses.

The fourth point notes the complexities of different integration approaches, such as "merger of equals" or joint ventures, which introduce unique challenges for TOM development. Clear communication and decision-making processes are vital to navigate these complexities effectively.

Overall, the slide serves as a guide for executives to avoid common pitfalls in TOM development, ensuring a smoother integration process.

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M&A (Mergers & Acquisitions) Target Operating Model Organizational Structure Joint Venture M&A