Industry Consolidation will be Inevitable in 2009, but Smart Businesses That Carve Out a Niche Are Often the Most Profitable

New Book Reveals Strategies Used By Executives to Successfully Position Their Companies in Consolidating Industries

CHICAGO, February 2, 2009 — With a consumer-spending and credit-market crisis sweeping around the world in Q1 and Q2, 2009,  and market valuations at historically low levels, corporate consolidation promises to be a critical business trend in 2009. In Beating the Global Consolidation Endgame (McGraw-Hill; 2008; $39.95), A.T. Kearney thought leaders Fritz Kroeger, Andrej Vizjak and Mike Moriarty present the results of a massively comprehensive study of some 660,000 public and private companies world wide. 

Time and again, the research conducted by the authors finds that industry sectors follow a standard developmental cycle.  The evidence shows that within 25 years of the development of an industry sector, three or four global leaders will emerge that control 60-70% of the market, and that some 80% of all companies are, in fact, “niche players.” But while niche companies may be popularly imagined as plucky Davids standing up to corporate Goliaths, in most cases the term is just another name for a company that hasn’t gone out of business or been gobbled up yet.

The authors have identified nine strategies companies can use to create viable niches at different points in an industry's development. "Some companies do manage to find a niche that allows them to thrive and find a stable and profitable place for themselves, and if not, then they at least maximize their cash-out value," observes Moriarty.  "To do so," he advises, "these companies have to align their approach with the maturity of their specific industry."

Using broad statistical data as well as illustrations from a wide range of industries, Kroeger, Vizjak, and Moriarty give a lucid picture of the Merger Endgame Theory; identifying nine key strategies that have helped companies to survive and flourish in consolidating industries.  The book shows how to identify and implement an appropriate strategy as it becomes relevant at various points in the industry consolidation cycle.  Moreover, the authors’ research demonstrates that those companies that successfully execute their niche strategy are usually more profitable than the large global consolidators. Using both theory and anecdote, Endgame will help its executives understand the position of their company within their industry sector, the opportunities and challenges that position presents for the niche player, and the most stable and profitable niche to occupy. 

As the authors write “We are not particularly happy about the global consolidation trend, but having studied the empirical data for the last 25 years, we can only advise our business clients to accept it as a matter of fact.”

For more information on “Beating The Global Consolidation Engame” please go to www.consolidationendgame.atkearney.com.

About the Consolidation Endgame Study:
Using a data base of 32,000 publicly traded companies and 630,000 privately held companies (prepared for Kroeger, et al, The Growth Code Deciphered: Strategies for Increasing the Value of Companies, Wiesbaden, 2000). The authors identified 600 companies that had achieved the highest revenue growth and highest market capitalization growth over a sustained period of time. All available information – quantitative and qualitative – about those companies was analyzed to determine which strategies the companies used to remain viable and profitable over time.  These strategies were compared with where companies’ industry sectors were in the Merger Endgame life-cycle.  Throughout the two-year study, the findings were tested for relevance and stability both within the A.T. Kearney network and with interested client companies.

About the Authors:
Dr. Fritz Kroeger is partner and head of A.T. Kearney’s European strategy practice.  He is the author of eight books on restructuring, growth strategy, and merger integration, including Winning the Merger Endgame (McGraw-Hill, 2002).

Dr. Andrej Vizjak is partner and managing director of A.T. Kearney’s Eastern European operations. His consulting work has focused on M&A growth, consolidation, and innovation.

Mike Moriarty is partner and head of A.T. Kearney’s North American consumer industries and retail practice.  He has written extensively on global competitiveness, consumer trends, and new markets.

About A.T. Kearney
A.T. Kearney is a global strategic management consulting firm known for helping clients gain lasting results through a unique combination of strategic insight and collaborative working style. The firm was established in 1926 to provide management advice concerning issues on the CEO’s agenda. Today, we serve the largest global clients in all major industries. A.T. Kearney’s offices are located in major business centers in 34 countries.