The Cornerstone of M A Decision Making

1. Understanding the M&A Landscape

Mergers and acquisitions (M&A) represent a critical aspect of corporate strategy, enabling companies to achieve various objectives such as growth, diversification, and competitive advantage. The M&A landscape is complex and multifaceted, influenced by economic, regulatory, and market factors. It's a dynamic field where the stakes are high, and the outcomes can significantly alter the market's structure. Understanding this landscape requires a deep dive into the motivations behind M&As, the challenges faced during the process, and the strategies employed to ensure success.

From the perspective of corporate growth, M&As offer a fast track to scaling operations, entering new markets, and acquiring new technologies or talent. economies of scale and scope can be realized, potentially leading to enhanced profitability and market share. However, from a financial viewpoint, M&As are substantial investments that come with risks. The due diligence process, valuation challenges, and integration issues post-acquisition are critical areas that require meticulous attention.

1. Strategic Fit: The alignment between the acquiring and target companies in terms of culture, goals, and operations is paramount. For example, Disney's acquisition of Pixar allowed for a seamless integration of similar cultures and a shared vision for animation excellence.

2. Regulatory Environment: The legal framework can facilitate or hinder M&A activity. Antitrust laws, for instance, played a significant role in the scrutiny and eventual restructuring of AT&T's proposed acquisition of T-Mobile USA.

3. Market Conditions: Market volatility can impact the timing and pricing of deals. The 2008 financial crisis, for example, led to a slowdown in M&A activity as companies grappled with economic uncertainty.

4. Due Diligence: A thorough examination of the target company's financials, operations, and legal standing is crucial. The acquisition of Autonomy by Hewlett-Packard highlights the pitfalls of inadequate due diligence, leading to a multi-billion dollar write-down.

5. Integration Process: post-merger integration is often cited as the most challenging phase of M&A. Cultural clashes and operational discrepancies can derail the expected synergies, as seen in the Daimler-Chrysler merger.

The M&A landscape is a testament to the intricate dance between strategy and execution. It's a world where thorough analysis, strategic foresight, and meticulous integration pave the way for successful mergers and acquisitions. Understanding this landscape is not just about grasping the financial and legal intricacies but also about appreciating the human element that plays a crucial role in every deal.

2. Aligning Goals and Visions

In the intricate dance of mergers and acquisitions, the alignment of goals and visions between the entities involved is not just a preliminary step; it is the bedrock upon which successful integrations are built. This alignment, often referred to as strategic fit, is the degree to which the merging organizations' strategic objectives, corporate cultures, and business operations are compatible with one another. It's a multifaceted concept that encompasses various dimensions, including market positioning, financial goals, operational processes, and organizational culture. A thorough evaluation of strategic fit goes beyond mere compatibility; it seeks to identify synergies that can unlock value that is greater than the sum of the parts.

From the perspective of a CEO, strategic fit is about ensuring that the acquisition will directly contribute to the overarching strategic plan, often with a focus on long-term growth and market dominance. For a CFO, it's about the financial synergy that can be realized, whether through cost savings, increased revenue, or a more robust balance sheet. The COO will look at operational alignment, considering how the merger can streamline processes, improve efficiency, or expand capabilities.

Here's an in-depth look at the components of evaluating strategic fit:

1. Market Synergies: This involves assessing how well the combined entity can capitalize on market opportunities. For example, Disney's acquisition of Pixar allowed it to dominate the animation industry, leveraging Pixar's creative talent and Disney's distribution network.

2. Financial Integration: A critical aspect is the financial health of the companies involved. The merger of Vodafone and Idea in India was aimed at creating a financially stronger entity capable of investing in new technologies and competing with rivals.

3. Operational Compatibility: This includes evaluating whether the merging companies can integrate their operations without significant disruptions. Amazon's acquisition of Whole Foods is a prime example, where Amazon's e-commerce prowess was aligned with Whole Foods' retail operations to enhance the customer experience.

4. Cultural Alignment: Often overlooked, cultural fit is crucial for a smooth integration. When Microsoft acquired LinkedIn, they maintained LinkedIn's unique culture, which was key to its success, while integrating it into Microsoft's ecosystem.

5. Technology and Innovation: The ability to integrate and leverage technology and innovation is another important factor. Google's acquisition of Android Inc. Allowed it to enter the mobile operating system market, which was pivotal in its strategy to expand beyond search.

6. Regulatory Compliance: Ensuring that the merger complies with regulatory requirements is essential to avoid future legal complications. The proposed merger between Sprint and T-Mobile in the US had to navigate complex regulatory landscapes to gain approval.

7. Risk Management: Identifying and managing risks associated with the merger, such as market risks, operational risks, and integration risks, is vital. The failed merger between AOL and Time Warner is a cautionary tale of not adequately assessing and managing the risks involved.

Evaluating strategic fit is a complex but essential process in M&A decision-making. It requires a holistic approach that considers multiple perspectives and dimensions. By aligning goals and visions, companies can ensure that their merger or acquisition is not just a financial transaction, but a strategic move that will lead to sustainable growth and success.

3. Assessing Value and Risk

Financial due diligence is a critical component of the mergers and acquisitions (M&A) process, serving as the backbone for informed decision-making. It involves a comprehensive examination of the target company's financial health, aimed at uncovering any financial risks or potential deal-breakers that could affect the transaction's value. This meticulous analysis not only scrutinizes the historical financial statements but also delves into the quality of earnings, sustainability of cash flows, working capital trends, and the robustness of financial projections. By doing so, it provides acquirers with a clearer picture of what they are buying into, enabling them to make adjustments in their valuation models or negotiate more favorable deal terms.

1. Quality of Earnings: A thorough analysis of the target's earnings is essential to ensure that the reported income is sustainable and repeatable post-acquisition. For example, a company might have inflated its earnings by recognizing revenue prematurely or deferring expenses. Adjusting for these anomalies can significantly alter the valuation.

2. cash Flow analysis: Understanding the nature and predictability of the target's cash flows is paramount. This involves assessing the cash conversion cycle and identifying any factors that could cause future cash flows to deviate from historical patterns. For instance, if a company has historically relied on one-time tax rebates to boost its cash flow, this is unlikely to be sustainable in the long term.

3. working Capital assessment: Examining the working capital requirements gives insight into the operational efficiency and liquidity of the business. A company with high working capital might struggle to convert its inventory and receivables into cash, which can be a red flag for potential buyers.

4. Debt and Liabilities Review: Identifying all outstanding debts and contingent liabilities is crucial. This includes understanding the terms of debt, any covenants, and potential liabilities that may not be on the balance sheet, such as pending lawsuits or regulatory fines.

5. Tax Compliance and Structure: Ensuring that the target is compliant with tax laws and understanding the tax implications of the acquisition can prevent future liabilities and influence the deal structure. For example, acquiring a company with significant deferred tax assets can be advantageous, as these can offset future taxable income.

6. Capital Expenditure Requirements: Assessing the target's future capital needs is important for understanding the ongoing investment required to maintain or grow the business. A company that has been deferring maintenance or capital expenditures may require significant investment post-acquisition.

7. financial Projections and assumptions: Evaluating the reasonableness of the target's financial projections and the assumptions behind them is key. Overly optimistic revenue growth rates or underestimated expense projections can skew the valuation.

8. Synergies and Cost Savings: Identifying potential synergies and cost savings can enhance the value of the deal. For instance, if the acquiring company can consolidate manufacturing facilities, this can lead to significant cost reductions.

9. Regulatory and Compliance Risks: Understanding the regulatory environment and compliance risks associated with the target's industry can prevent unforeseen costs and challenges post-acquisition.

10. intellectual Property and asset Valuation: Valuing intangible assets such as intellectual property is often complex but essential for technology or knowledge-driven acquisitions.

By incorporating these elements into the financial due diligence process, acquirers can make more informed decisions, negotiate better terms, and ultimately, secure a deal that aligns with their strategic objectives. For example, when Company A acquired Company B, a thorough due diligence revealed that Company B had significantly underreported its liabilities. This discovery allowed Company A to negotiate a lower purchase price, reflecting the true value and risk of the acquisition. Financial due diligence, therefore, is not just about ticking boxes; it's about peeling back the layers of the financial onion to reveal the true essence of the target company's financial health and potential.

4. The Human Element in M&A

In the intricate dance of mergers and acquisitions (M&A), the spotlight often shines brightest on financials, growth projections, and market synergies. Yet, beneath these headlining figures lies the nuanced and pivotal layer of cultural considerations. The human element in M&A cannot be overstated; it is the very fabric that can bind a successful union or unravel a seemingly perfect deal. When two organizations come together, they bring distinct cultural identities shaped by their values, practices, and people. These differences can be a source of strength, fostering innovation and growth, or they can be a stumbling block, leading to miscommunication and conflict.

1. cultural Due diligence: Before any papers are signed, it is crucial to conduct a thorough cultural assessment. This involves understanding the core values, beliefs, and practices that define each company. For example, when German automaker Daimler merged with American company Chrysler, the stark contrast in corporate cultures led to a challenging integration.

2. Communication Styles: Effective communication is the lifeblood of any successful M&A. It's important to recognize and adapt to different communication styles, whether they are direct or indirect, formal or informal. For instance, Japanese firms often value a more indirect and consensus-driven approach, which can contrast with American firms' preference for directness.

3. leadership and Decision-making: Leadership styles and decision-making processes can vary widely between companies. Some cultures may have a top-down approach, while others encourage a more collaborative style. When French retailer Carrefour entered the Chinese market, it adapted its decision-making process to fit the local preference for collective leadership.

4. Employee Engagement: Engaging employees early and often in the M&A process helps to ease uncertainties and build trust. This might include town hall meetings, Q&A sessions, or workshops to align on common goals. Tech giant Google's acquisition of Android is an example where employee engagement played a key role in the smooth transition.

5. Integration Strategies: Developing a clear integration strategy that respects both cultures is essential. This could mean blending the best of both worlds or, in some cases, allowing each culture to operate independently. When Brazilian beverage company AmBev merged with Belgium's Interbrew, they formed InBev, a company that maintained distinct cultural identities within a unified corporate structure.

6. Training and Development: Post-merger, investing in cross-cultural training and development programs can bridge gaps and foster unity. Such initiatives can help employees understand cultural nuances and work effectively across borders.

7. Monitoring and Adjusting: Finally, it's important to monitor the cultural integration process and be ready to adjust strategies as needed. Regular check-ins and feedback mechanisms can identify areas of friction and opportunities for improvement.

The human element in M&A is a complex but critical factor that requires careful consideration. By acknowledging and addressing cultural differences, companies can pave the way for a merger that is not only profitable but also harmonious and sustainable. The success stories of M&A are those that have managed to blend cultures in a way that respects individual identities while creating a new, shared culture that propels the combined entity forward.

5. Navigating Compliance and Regulations

In the intricate dance of mergers and acquisitions (M&A), the legal framework serves as the choreography that ensures each step is performed in compliance with the law. This framework is not merely a checklist but a complex map of regulations that vary by jurisdiction, industry, and the specifics of each transaction. It's a dynamic landscape, where the legal terrain must be navigated with precision and foresight. From antitrust considerations to due diligence requirements, the legal framework dictates the rhythm and flow of the M&A process. It's a realm where legal expertise intersects with strategic business planning, and where overlooking a single regulation can lead to significant setbacks or even the unraveling of a deal.

1. Antitrust Laws: At the forefront of M&A legal considerations are antitrust laws, designed to prevent anti-competitive practices. For example, in the United States, the hart-Scott-Rodino antitrust Improvements Act requires parties to file a notification and report form with the federal Trade commission and the Department of Justice before completing certain large transactions. This pre-merger notification allows regulators to assess the potential impact on market competition. A notable case was the proposed merger between AT&T and T-Mobile in 2011, which was abandoned due to antitrust concerns raised by the Department of Justice.

2. due diligence: Due diligence is the comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential. A thorough due diligence process might have mitigated the fallout from Hewlett-Packard's $11.1 billion acquisition of Autonomy in 2011, which later led to an $8.8 billion write-down and allegations of accounting improprieties.

3. Regulatory Approvals: Beyond antitrust issues, M&A transactions often require approval from various regulatory bodies. In cross-border deals, this might involve navigating the Committee on Foreign Investment in the United States (CFIUS), which reviews the national security implications of foreign investments in U.S. Companies. The blocked acquisition of MoneyGram by Alibaba's Ant Financial in 2018 is a case in point, where CFIUS cited national security concerns.

4. employment laws: Employment laws also play a critical role, particularly when it comes to the transfer of employees between entities. The European Union's Acquired Rights Directive protects employees' rights in the event of business transfers, mergers, or takeovers, ensuring their contracts of employment and rights are preserved.

5. Intellectual Property (IP) Rights: Protecting IP rights is paramount in M&A, as these are often key assets in the transaction. The acquisition of Motorola Mobility by Google for $12.5 billion in 2012 was largely driven by the desire to access Motorola's extensive patent portfolio, highlighting the value placed on IP assets.

6. environmental regulations: Environmental regulations can also influence M&A decisions, particularly in industries like manufacturing, energy, and chemicals. The acquisition of a company may come with environmental liabilities that can pose significant financial risks, as seen in the case of Occidental Petroleum's acquisition of Anadarko Petroleum, which included potential liabilities for environmental cleanup.

7. data Protection and privacy Laws: In today's digital age, data protection and privacy laws are increasingly important. The general Data Protection regulation (GDPR) in the EU imposes strict rules on data handling and has significant implications for M&A, particularly when personal data is transferred between entities.

navigating the legal framework in M&A requires a multidisciplinary approach that combines legal expertise with strategic business acumen. It's about understanding not just the letter of the law, but the spirit of regulation, and how it fits into the broader picture of a successful merger or acquisition. The legal framework is the backbone of M&A decision-making, ensuring that while companies pursue growth and expansion, they remain firmly within the bounds of the law.

6. The Blueprint for Post-Merger Success

In the intricate dance of mergers and acquisitions, the final act of integration often determines the performance's success. Integration planning is not merely a phase that follows the M&A deal; it is the strategic blueprint that ensures the seamless melding of two distinct entities into a unified, synergistic organization. This meticulous process involves harmonizing cultures, aligning goals, and merging operations, all while maintaining business continuity. It's a multidimensional challenge that requires foresight, flexibility, and an unwavering focus on the end goal: to unlock the full potential of the combined entity and deliver on the promises of the merger.

From the perspective of senior leadership, integration planning is about vision and steering the new organization towards a common future. For employees, it's about clarity, communication, and the alignment of their roles within the new structure. Customers and stakeholders look for reassurance that the services and products they rely on will continue to improve. Meanwhile, operational teams face the practicalities of combining systems and processes.

Here are some in-depth insights into the key aspects of integration planning:

1. Cultural Integration: Perhaps the most delicate aspect of any merger is blending two distinct corporate cultures. Example: When a global tech giant acquired a smaller innovative startup, they used 'culture committees' to find common ground and foster a sense of unity.

2. Operational Synergy: The goal is to achieve greater efficiency and effectiveness than either company could have managed alone. Example: A merger between two pharmaceutical companies led to the consolidation of R&D facilities, which streamlined drug development processes.

3. Communication Strategy: Keeping all parties informed prevents the spread of misinformation and eases the transition. Example: A retail merger was successful partly due to a transparent communication plan that involved regular updates to employees and customers alike.

4. Customer Retention: Ensuring that the merger does not disrupt customer experience is crucial for retaining trust and loyalty. Example: When two banks merged, they prioritized integrating customer service operations to maintain high service standards.

5. Regulatory Compliance: Navigating the legal landscape post-merger is a complex but necessary step to avoid penalties and ensure legality. Example: In a cross-border merger, the companies established a compliance task force to address the different regulatory environments.

6. IT Systems Integration: Merging IT infrastructures without causing business disruption is a technical challenge. Example: An airline merger used phased IT integrations to avoid any impact on flight operations.

7. Talent Retention and Restructuring: Keeping key talent while optimizing the workforce is a delicate balance. Example: A media merger led to role redundancies, but through a careful talent assessment, key individuals were retained and repositioned.

8. Financial Alignment: The combined entity needs a unified financial system for reporting and decision-making. Example: Post-merger, a manufacturing conglomerate overhauled its financial reporting systems to provide real-time data analytics.

Integration planning is the compass that guides the newly formed entity through the complexities of change. It's a comprehensive approach that touches every aspect of the business and requires a concerted effort from all levels of the organization. When executed with precision, it can be the catalyst for unprecedented growth and success.

7. Managing Expectations and Relationships

effective stakeholder communication is a pivotal element in the intricate process of mergers and acquisitions (M&A). It involves a delicate balance of managing expectations and nurturing relationships that can significantly influence the outcome of an M&A deal. Stakeholders in an M&A context include a broad spectrum of entities such as investors, employees, customers, suppliers, and regulatory bodies, each with their own set of expectations and concerns. The key to successful stakeholder communication lies in understanding the unique perspectives and interests of these diverse groups and crafting a communication strategy that addresses them thoughtfully.

1. Investor Relations: Investors seek reassurance on the financial soundness of an M&A deal. They are interested in understanding how the acquisition will deliver value, the risks involved, and the expected return on investment. For example, when Company A announced its intention to acquire Company B, it held a series investor briefings to explain the strategic rationale behind the acquisition and projected financial benefits.

2. Employee Engagement: Employees are often concerned about job security and changes in corporate culture post-M&A. Transparent communication about potential restructuring, opportunities for growth, and cultural integration plans can alleviate employee anxiety. A case in point is the merger between two tech giants where the leadership team conducted town hall meetings to address employee questions and concerns directly.

3. Customer Assurance: Customers want to know how the M&A will affect the products or services they rely on. Maintaining open lines of communication to assure customers of continued service quality and support is crucial. An example is the merger of two consumer goods companies that used targeted emails and dedicated webpages to inform customers about the continued availability and improvement of products.

4. Supplier and Partner Relations: Suppliers and partners are interested in the continuity of agreements and potential new business opportunities. Proactive communication to reaffirm commitments and explore synergies can strengthen these relationships. For instance, when a manufacturing company was acquired, the new entity promptly reached out to key suppliers to discuss the implications of the merger and future collaboration plans.

5. Regulatory Compliance: Regulatory bodies require detailed information about the M&A to assess its impact on competition and market dynamics. Providing comprehensive documentation and being responsive to regulatory inquiries is essential for a smooth approval process. The acquisition of a pharmaceutical company, for example, necessitated extensive dialogue with health regulators to ensure compliance with industry standards.

Managing stakeholder communication in M&A requires a multifaceted approach that considers the diverse interests and expectations of all parties involved. By fostering a culture of openness and responsiveness, companies can navigate the complexities of M&A decision-making more effectively and pave the way for a successful integration.

8. Ensuring Seamless Transition

In the intricate dance of mergers and acquisitions, the harmonization of technology and systems stands as a pivotal performance. It's the backbone that supports the amalgamation of disparate entities into a cohesive whole. This integration is not merely a technical endeavor; it's a strategic imperative that demands meticulous planning, execution, and oversight. The goal is to create a seamless transition that is invisible to customers yet empowers employees, ensuring that the combined entity is greater than the sum of its parts.

From the CIO's perspective, the integration of IT systems is a top priority. It's a complex task that involves merging data centers, networks, and software applications. The CIO must ensure that the IT infrastructure is robust enough to handle the increased load and that data integrity is maintained throughout the process.

HR leaders, on the other hand, focus on the human aspect of system transitions. They must ensure that employees are trained on new systems and that cultural integration is smooth. This often involves creating comprehensive training programs and clear communication channels to address any concerns.

Financial officers scrutinize the cost implications of technology integration. They must balance the budgetary constraints with the need for investing in new technologies that will drive future growth. This often means making tough decisions about which legacy systems to retire and where to allocate resources for new technology investments.

Here's an in-depth look at the key aspects of ensuring a seamless transition in technology and systems during M&A:

1. Data Consolidation and Integrity: Combining data from different sources often leads to redundancy and inconsistency. A robust data governance framework is essential to cleanse, merge, and manage data effectively. For instance, when Dell acquired EMC, one of the largest technology mergers, they had to consolidate vast amounts of data across various business units, which was critical for the success of the merger.

2. System Compatibility and Integration: Ensuring that the acquired company's systems are compatible with existing systems is crucial. This might involve upgrading or replacing incompatible systems. An example is when SAP acquired Qualtrics; integrating Qualtrics' experience management software into SAP's enterprise resource planning system was a key focus.

3. Cybersecurity Measures: With the increase in cyber threats, ensuring the security of integrated systems is paramount. This includes conducting thorough security assessments and implementing robust security protocols. The Verizon acquisition of Yahoo was almost derailed due to cybersecurity concerns, highlighting the importance of this aspect.

4. Change Management: Managing the human side of system changes is as important as the technical side. This involves clear communication, training, and support to help employees adapt to new systems. When Microsoft acquired LinkedIn, they focused on maintaining LinkedIn's unique culture while integrating the technology and systems.

5. Continuous Monitoring and Optimization: Post-integration, it's vital to monitor system performance and make continuous improvements. This ensures that the systems remain efficient and effective over time.

The seamless transition of technology and systems in the context of M&A is a multifaceted challenge that requires a balanced approach, considering both the technical and human elements. It's a critical factor that can determine the success or failure of the merger, and thus, demands the highest level of attention and expertise.

9. Key Takeaways for Successful M&A Decisions

Mergers and acquisitions (M&A) are pivotal moments in a company's life that can dictate its trajectory for years to come. They are complex processes that require meticulous planning, strategic analysis, and careful execution. As we reach the conclusion of our exploration into the cornerstone of M&A decision-making, it's crucial to distill the essence of what makes for successful M&A decisions. This involves a multifaceted approach that considers the financial, strategic, cultural, and operational aspects of both entities involved.

From a financial perspective, the key takeaway is the importance of thorough due diligence. financial statements and projections must be scrutinized to ensure that the numbers not only add up but also make sense in the long run. For example, when JPMorgan Chase acquired Bank One, the deal was not just about the immediate financial gain but also about the strategic positioning for future growth.

Strategically, it's essential to have a clear vision of how the acquisition or merger fits into the long-term goals of the company. The acquisition of Pixar by Disney is a prime example of a strategic fit that allowed Disney to rejuvenate its animation department and capitalize on Pixar's creative talent and technology.

Culturally, the integration of two different company cultures can be one of the most challenging aspects of M&A. A successful M&A decision accounts for these differences and finds ways to bridge them. When Lenovo acquired IBM's PC division, it wasn't just about acquiring assets and market share; it was also about integrating IBM's corporate culture with Lenovo's entrepreneurial spirit.

Operationally, the integration plan must be detailed and actionable. It should address how to combine systems, processes, and people to achieve the desired synergies. The merger of United Airlines and Continental Airlines serves as a cautionary tale of how operational challenges can persist long after the deal is closed if not properly managed.

Here are some in-depth key takeaways:

1. Alignment of Vision and Strategy: Both companies must share a common vision for the future. The merger of Exxon and Mobil created the world's largest publicly traded oil company, ExxonMobil, because both companies shared a vision of dominating the global oil market.

2. comprehensive Due diligence: This goes beyond the financials to include legal, environmental, and operational audits. The acquisition of WhatsApp by Facebook for $19 billion in 2014 was driven by comprehensive due diligence that recognized the app's rapid growth and engagement levels.

3. Effective Communication: Clear and transparent communication with all stakeholders, including employees, investors, and customers, is vital. When Dow Chemical merged with DuPont, forming DowDuPont, effective communication played a crucial role in managing expectations and maintaining stakeholder trust.

4. Cultural Integration: Develop a plan to merge the cultures of both organizations. Google's acquisition of Android Inc. In 2005 is an excellent example of how Google not only acquired technology but also embraced the innovative culture of Android, which helped it to become the leader in mobile operating systems.

5. Post-Merger Integration (PMI): A well-defined PMI plan is essential for realizing the full potential of the merger or acquisition. The merger of Vodafone and Mannesmann in 2000, which was the largest in history at the time, highlighted the importance of a robust PMI plan to combine operations across different countries.

6. Regulatory Compliance: Ensure that the deal complies with all regulatory requirements to avoid future legal complications. The merger between Glaxo Wellcome and SmithKline Beecham to form GlaxoSmithKline in 2000 demonstrated the importance of navigating complex regulatory landscapes.

7. Risk Management: Identify and mitigate potential risks early in the process. The acquisition of Autonomy by Hewlett-Packard in 2011 serves as a reminder of the risks involved in M&A, as HP had to write down most of the $11.1 billion purchase price due to accounting improprieties.

Successful M&A decisions are the result of a comprehensive approach that balances financial acumen with strategic foresight, cultural empathy, and operational expertise. They require a deep understanding of not just the deal itself but also the broader industry context and the evolving market dynamics. By adhering to these key takeaways, companies can navigate the complex waters of M&A and emerge stronger and more competitive.