© 2002 Corporate Executive Board
Strategic Deal Index
Combining Financial and Strategic Factors
Strategic Development Group Deal Index Scoring Strategic Factors
Cendant Points for each of the four strategic
Risk factors are determined based on criteria
• Volatility of industry developed for each factor and scored
• Complexity of integration across five values.
1.5 points • Turnaround required
• Achievability of growth targets Example: Strategic Fit (1 point)*
6 points 1 point
0.5 Market Position Criteria: • Fills a capability gap
1 point points • Increases market share from • Leverages core skill
number two to number one
• Facilitates speed to market
• Creates a unique value
proposition • Broadens product scope
• Moves into high-growth market
Effectiveness in Meeting Criteria:
Synergies Very Effective 1 point × 0 = 0
• Scope of available synergies
• Uniqueness of synergy relative Effective 1 point × .25 = .25
Accretion/Dilution to other acquisition targets Somewhat Effective 1 point × .50 = .50
The index score reflects the amount Not Effective 1 point × .75 = .75
spent (in millions of dollars) per penny
Strategic Fit Potentially Harmful 1 point × 1 = 1
of accretion:
• Fills a capability gap
Deal Value ($ millions) • Leverages core skill
Expected Earnings 10,000 • Facilitates speed to market
Accretion per Share • Broadens product scope
A deal that is effective in meeting
strategic fit criteria receives .25 point
* A low index score denotes a more attractive deal. Source: Cendant Corporation; Corporate Strategy Board research.
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