M&A strategic fit evaluator

Purpose

Convert a fuzzy "does this deal make sense?" question into a structured, weighted scorecard that scores a target across six strategic fit dimensions with specific commentary and deal-breaker flags — so corporate development can rank targets consistently, defend the rationale to an investment committee, and catch integration and culture risks before they surface in diligence.

When to Use

Invoke this skill when the user asks to:

• Evaluate whether an acquisition target fits their strategy
• Compare two or more targets against the same criteria
• Build the strategic rationale for an IC memo or board deck
• Screen a pipeline of targets before committing diligence resources
• Assess a potential merger, JV, or strategic partner for fit
• Pressure-test a deal thesis that "feels right" but hasn't been scored

Inputs Required

Before starting, collect:

• Acquirer profile: The buyer's core business, market position, and current capabilities
• Strategic thesis: The specific rationale for the deal (market entry, capability acquisition, consolidation, talent, etc.)
• Target overview: What the target does, size, market, and stage
• Target financials: Revenue, growth rate, margins, and any known debt or burn — approximate is fine
• Known synergies or overlaps: Where the two businesses reinforce or duplicate each other
• Dimension weights (optional): Custom weighting across the six dimensions if the deal has an unusual priority (e.g., capability-driven deals weight capabilities higher)
• Comparison set (optional): Other targets being evaluated for relative ranking

If dimension weights are not provided, use the default weighting in Step 1 and state the assumption. If financials are incomplete, score the Financial Health dimension on available data and flag the gaps.

Instructions

Step 1: Set the Scoring Framework

Score each dimension 1–10 and apply weights. Use this default weighting unless the user provides custom weights:

Note: Integration Complexity is scored inversely — a lower complexity earns a higher score, because low complexity is favorable.

Adjust weights to the thesis: capability-driven deals push Capability Complementarity to 30%; consolidation plays push Integration Complexity and Financial Health up; talent acquisitions push Cultural Alignment up. State any reweighting explicitly.

Step 2: Score Each Dimension With Evidence

Dimension 1 — Market Position & Strategic Thesis Alignment (score 1–10) Does the target advance the specific strategic thesis, or is it adjacent?

• Assess: market adjacency, competitive positioning, whether the target opens a new segment/geography or deepens the core
• Score 8–10: directly executes the stated thesis with a defensible position; 4–7: partial or adjacent fit; 1–3: thesis is a stretch or post-hoc justification
• Commentary must connect the score to the stated thesis, not to generic strategic value

Dimension 2 — Capability Complementarity (score 1–10) Does the target add what the acquirer lacks — or duplicate what it already has?

• Assess: technology, IP, talent, distribution, product gaps filled
• Distinguish complementary (fills a gap, 8–10) from additive (more of the same, 4–7) from redundant (overlaps existing strength, 1–3)
• Flag build-vs-buy: could the acquirer develop this capability faster/cheaper internally?

Dimension 3 — Financial Health (score 1–10) Is the target financially sound enough to justify the price and survive integration?

• Assess: revenue quality and growth, margin structure, cash position and burn, debt load, customer concentration, revenue predictability (recurring vs. project)
• Score 8–10: growing, profitable or clear path, clean balance sheet; 4–7: mixed signals; 1–3: distressed, high burn, or concentration risk
• Flag any single customer >20% of revenue as a concentration risk

Dimension 4 — Cultural Alignment (score 1–10) Will the two organizations operate together without value destruction?

• Assess: decision-making style, pace, remote/in-office norms, founder involvement, incentive philosophy, autonomy vs. integration expectations
• Score 8–10: compatible operating models and values; 4–7: manageable gaps requiring active change management; 1–3: fundamental mismatch likely to trigger attrition
• Culture mismatch is the most common cause of failed integrations — do not soften this score

Dimension 5 — Integration Complexity (score 1–10, inverse) How hard is it to actually combine the two businesses? Lower complexity = higher score.

• Assess: systems/tech stack overlap, org structure, geographic spread, regulatory approvals, dependency on retained founders/key people, customer contract portability
• Score 8–10 (low complexity): clean carve-out or standalone integration; 4–7: moderate stitching required; 1–3 (high complexity): deep entanglement, retention risk, or regulatory drag
• Name the top 2–3 specific integration risks

Dimension 6 — Growth & Value Creation Potential (score 1–10) Beyond the base case, what upside does combination unlock?

• Assess: revenue synergies (cross-sell, new channels), cost synergies, market expansion, platform effects
• Distinguish credible near-term synergies from speculative ones; discount synergies that require flawless execution

Step 3: Calculate the Weighted Score

Multiply each dimension score by its weight, sum to a composite score out of 10, and present the math in the scorecard table.

Step 4: Flag Deal-Breakers

Independent of the weighted score, flag any binary deal-breakers that no composite can offset:

• Any single dimension scored 1–2
• Customer concentration above ~40%
• Cultural mismatch severe enough to risk losing the talent the deal is buying
• Integration complexity that eliminates the thesis's value

A high composite score with an active deal-breaker is still a pass or conditional-go, not a go.

Step 5: Recommendation

Deliver one of three verdicts with rationale:

• Go: Composite ≥ 7.0, no deal-breakers, thesis clearly served
• Conditional-Go: Composite 5.5–7.0 or a fixable risk — state the specific conditions that must be validated in diligence
• Pass: Composite < 5.5 or an active deal-breaker

Be opinionated. Name the single biggest reason for the verdict and the single most important thing diligence must confirm.

Output Format

• Structure: Weighted scorecard table first, then per-dimension commentary, then deal-breaker flags, then recommendation
• Length: 900–1,300 words
• Format: Scorecard as a table (dimension, score, weight, weighted score); commentary as structured prose per dimension; deal-breakers as a flagged list; recommendation as a clearly labeled verdict
• Sections: Scoring Framework & Weights → Weighted Scorecard (table) → Dimension Commentary (six blocks) → Deal-Breaker Flags → Recommendation
• Tone: Corporate development director — analytical, evidence-anchored, willing to say pass; no hedging on the final verdict

Quality Checklist

Before delivering output, verify:

• [ ] All six dimensions are scored 1–10 with a stated rationale for each score
• [ ] Weights sum to 100% and the composite score math is shown in the table
• [ ] Integration Complexity is scored inversely (low complexity = high score) and stated as such
• [ ] Every dimension's commentary ties to the target's specifics — not generic M&A language
• [ ] Deal-breakers are evaluated independently and can override a high composite score
• [ ] The recommendation is one of Go / Conditional-Go / Pass with a named primary reason

Notes

• The most common scoring error is inflating Strategic Thesis Alignment to justify a deal someone already wants to do — score the thesis as stated, not the deal as desired
• Culture and Integration Complexity are systematically underweighted by deal teams and systematically responsible for post-close value destruction — resist the temptation to round them up
• When comparing multiple targets, hold the weights constant across all of them so the ranking is apples-to-apples, and present a side-by-side composite table
• This scorecard sizes strategic fit, not price — a strong fit at the wrong valuation is still a bad deal; note when valuation should be the next gate

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