M&a the Mckinsey Quarterly 2000 Number 4
18
THE McKINSEY QUARTERLY 2000 NUMBER 4
appeals to no one, least of all their core segment. They are better off cultivating core-segment customers who repeatedly purchase items of greater than average value. In time, new technologies will permit marketers to display the content and products that most appeal to particular user segments.
Ultimately, segments based on demographics will give way to offerings informed by the tastes and needs of individuals.
—John E. Forsyth, Johanne Lavoie, and Tim McGuire
h fi i'"' n H h
ni S
Although the Internet has been around for a relatively short time,
McKinsey research shows that Internet-related transactions already account for about 20 percent of worldwide M&A activity, both by value and by number of deals (Exhibit 1).
The drive for growth has spurred the deal making—in contrast to M&A in more mature industries, where the driving force is often the desire to reduce excess capacity and achieve economies of scale. When the buyer of an
Internet company is
EXHIBIT 1 another Internet company,
More deals, more money: Internet M&A takes off it usually acts to build up its core business
Percent of total M&A deals
Percent of total M&A value
(for example, an on-line that are Internet related that is Internet related stockbroker acquiring
22.6
19.2 a financial-information company); to extend an existing line (an e-tailer specializing in books
3,5
and music moving into toys and tools); or to
1999
2000' expand geographically
Total number
-25,100
-9,400 of M&A deals
(an Internet service pro^Through May 2000, excluding America Online-Time Warner deal (if included would vider or portal company raise Internet-related M&A share of total value to 33%).
Source: Thomson Financial Securities Data; McKinsey analysis buying portals outside the
A
CURRENT RESEARCH
home market). Internet companies that buy
"landed" (physical-world) incumbents generally come from the same or
a
THE McKINSEY QUARTERLY 2000 NUMBER 4
appeals to no one, least of all their core segment. They are better off cultivating core-segment customers who repeatedly purchase items of greater than average value. In time, new technologies will permit marketers to display the content and products that most appeal to particular user segments.
Ultimately, segments based on demographics will give way to offerings informed by the tastes and needs of individuals.
—John E. Forsyth, Johanne Lavoie, and Tim McGuire
h fi i'"' n H h
ni S
Although the Internet has been around for a relatively short time,
McKinsey research shows that Internet-related transactions already account for about 20 percent of worldwide M&A activity, both by value and by number of deals (Exhibit 1).
The drive for growth has spurred the deal making—in contrast to M&A in more mature industries, where the driving force is often the desire to reduce excess capacity and achieve economies of scale. When the buyer of an
Internet company is
EXHIBIT 1 another Internet company,
More deals, more money: Internet M&A takes off it usually acts to build up its core business
Percent of total M&A deals
Percent of total M&A value
(for example, an on-line that are Internet related that is Internet related stockbroker acquiring
22.6
19.2 a financial-information company); to extend an existing line (an e-tailer specializing in books
3,5
and music moving into toys and tools); or to
1999
2000' expand geographically
Total number
-25,100
-9,400 of M&A deals
(an Internet service pro^Through May 2000, excluding America Online-Time Warner deal (if included would vider or portal company raise Internet-related M&A share of total value to 33%).
Source: Thomson Financial Securities Data; McKinsey analysis buying portals outside the
A
CURRENT RESEARCH
home market). Internet companies that buy
"landed" (physical-world) incumbents generally come from the same or
a