When cash is king in M&A

Following on from last week's posting, we've seen more merger and acquisition (M&A) activity with TCS acquiring Citigroup's captive business process outsourcing (BPO) operations.

This is a great example of companies applying the 3C framework to achieve a positive outcome for both TCS and Citigroup. It also shows how having some "spare cash" can create opportunities in turbulent times.

I would expect that we'll see more of this M&A activity over the coming months--the question will be how much it will take to re-shape the sourcing landscape, and hopefully, it'll be for the benefit of both the buyers and sellers of services.

If we look further ahead though, I'm still watching for the big play where someone offers services that address data privacy and business resiliency concerns in an innovative way.

IBM revolutionized computing with the concept that data that tracked usage of computers was as important as the base processing. Federal Express did the same with data that tracked movement of shipments. Someone will do it with regard to movement of data to address privacy issues.

I wonder if that next innovation might come out of the "cash is king" M&A activity that we'll see over the next while.

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Michael Rehkopf

Michael has more than 20 years of experience in operations, strategy and sourcing covering all major parts of the globe. He has also worked for Australian, Canadian, German and Japanese companies in both business process outsourcing and IT outsourcing.
Michael's industry experience includes the financial services, manufacturing, telecommunications and travel sectors. He leverages this diverse industry experience and his university background in accounting, IT and his Master of Dispute Resolution, to assist clients in the development of business strategies and the implementation of sourcing strategies. These include the associated evaluation, negotiation and organizational change.
Michael is currently a partner at TPI, the world's oldest and largest sourcing advisory firm. Prior to joining TPI, Michael held leadership positions with Siemens Business Services, OpenPlus International, Mitsubishi Electric and Netron.