What Does Transformational Deal Mean?
A transformational deal is a deal that changes the very nature and operations of a company. Some examples include acquisition of new markets, channels or products; sale or merger with another company; or any other deal that is likely to have lasting effects on the company. Such a deal entails significant operational integration and the success of this integration could define the success of the company.
Divestopedia Explains Transformational Deal
Transformational deals have become popular due to the changing dynamics of the world economy. Many companies are looking to change the way they conduct their business, alter their existing business model or scale their enterprise to meet the changing external and internal changes that are taking place within their respective industries. To achieve these goals, a transformational deal is a better strategy when compared to absorption, tuck-in or stand-alone strategies because transformational deals give the organization an opportunity to look beyond their core competency.
The growth experienced as a result of a transformational deal is shaped by several factors such as stricter regulation, advancements in technology and changing customer expectations. A case in point is the many transformational deals that are occurring in the cable television industry. These deals are necessitated by the fact that technology has advanced rapidly and this has changed the focus of cable companies from being mere distributors to content creators. Also, customers expect cable providers to allow them access to increasingly more features such as on-demand programs and customized viewing options. Such changes have made transformational deals essential in this industry and many cable companies are making these deals successful by instituting big changes to their existing operations.
Additionally, many companies in the retail industry are commencing transformational deals in order to revamp their supply chain thereby delivering better products to customers within a shorter time frame. An example of such a retailer is Amazon.com. This company is building physical warehouses for different departments, and using advanced logistics and automation software to ensure that products reach customers within the shortest time possible.