Dr Graham Clarke
Prof. Stan Openshaw
1st Sepember 1998 - 31st August 2002
School of Geography / GMAP
As the European financial services market becomes more integrated the importance of the merger and acquisition (M&A) growth method has never been greater. Indeed, we are currently witnessing an unprecedented ‘wave’ of activity that has smashed all existing records both in terms of the number of transactions and the size of those deals. However, their success rate is low. Four decades of research has continually found that at least half fail to meet the initial objectives of the parties involved. One way of improving the performance of retail mergers is through adopting a spatial modelling approach to acquisition planning and evaluation through an analysis of distribution networks at the local geographical scale.
An understanding of the small scale ‘dynamics’ of retail branch networks is a critical element in evaluating best partners for merger yet is frequently overlooked. That is, national, or at best regional, market shares are considered but rarely is the analysis undertaken at smaller geographical scales. The result is often much overlap in the combined network, and/or a failure to maximise market penetration and merger returns. In particular, no research has addressed how spatial analysis and modelling techniques can be applied to M&A planning. Such models provide an efficient framework for systematically evaluating different network configurations and optimising network performance to maximise corporate goals such as profits or market share. These techniques offer enormous potential for improving the planning and evaluation of retail M&As.
This study sets out to address lack of research and unlock the potential application of spatial modelling to M&A planning. It aims to develop a spatial modelling framework to optimise retail M&As (from the point of view of maximising market shares and/or profits), and apply this model to the current European retail financial services market. Based on a series of detailed market analyses at the local geographic scale, the study produces recommendations as to best partners for a range of organisations in two of the fastest growing European retail financial services markets the UK & Italy.