We now want to finish talking about one of the tools in your toolkit, the acquisition analysis. And remember, it might be a useful way, conceptually, to think about this tool as being sort of like an equation, right? We've talked about the first two elements in this equation. We've talked about the strategic benefit, why is it that we want to go after this particular target and make the acquisition? We've talked about the purchase price and how we need to take into account all of the costs of success involved with pulling this acquisition off. And so now we want to talk about the final element, which is the opportunity cost. Now, this is a critically important idea in business strategy. We need to consider whether any strategy we're pursuing is the best use of our time and resources and energy and money. Or is there some other strategy that we would be better off pursuing instead? So yes, it's important to realistically understand the strategic benefit of the potential acquisition. And yes, it's critically important to understand do we have the right purchase price and does that take into account all of the costs that we think we might need to incur to make this acquisition a success? And of course, we would never go forward if the benefit didn't outweigh those costs. So of course, that first part of the equation, the benefit minus the cost, needs to be a positive. But that's not enough. We need to also understand if that net benefit, whatever it is, does that outweigh any other potential net benefit of an alternative strategy we might pursue instead? So, for instance, we might think about that a little more narrowly. We might think about it as, let's say our immediate goal is to diversify, and we're thinking about making a potential acquisition to diversify in a certain way. What we want to really carefully think about, is there another way to achieve that diversification, perhaps through growing organically or building the capability internally versus acquiring it? And if that potential route to achieving that diversification goal is better, represents a better cost benefit than going through this potential acquisition, maybe it's less risky, then perhaps we ought to think about perusing that path instead of this path of the potential acquisition we're considering. We also might think about this more broadly. We might think about it in terms of is there a different strategic objective that might be even better for us to pursue than, say, diversification? Maybe there's something else we want to do instead, and that would represent a potentially more valuable strategic choice than going through this particular acquisition. So this idea of thinking carefully about opportunity cost is a critically important idea in business strategy. And it should govern not just the way you think about potential acquisitions, but really any strategic choice your make. You should really ask yourself, is my time and energy and money better spent on a different initiative, on a different potential strategy, on a different way of achieving the objectives we want to achieve? So as we think about all of these elements of an acquisition analysis, we've now talked about all of them, we've talked about the strategic benefit, and how that's composed of both the independent valuation of that target, as well as what value we think it might add to integrate that target into our current business operations. That's the strategic benefit. We've talked about the purchase price and how that needs to take into account what are all of the costs that we're gonna incur to make this acquisition a success? And can we incur all those costs, as well as pay this potential purchase price, and will that still net out to be positive? And then finally, we need to make sure that that net positive, whatever it works out to be, is still a more valuable thing to us than the net positive of some other potential strategic action. In other words, is the opportunity cost something we ought to think about here, and would that push us in a different direction, or would that push us in favor of going with this potential acquisition? So that is the acquisition analysis. Now, as you go forward, I think there's some potential things for you to consider. First of all, we know that we ought to assume that there's a high probability of failure. We know that most acquisitions fail, and so we have to really be aware of the pitfalls. We have to really carefully evaluate those targets inside and out, not only to understand their independent value, but understand how putting them together with us will create some synergy, some integrative value that's greater than the sum of the parts, right? It's always beneficial to be friendly and not hostile. There's lots of ways that target firms can resist a takeover, and you don't really want to have that problem. I think it's much more useful as part of a holistic negotiation where there's mutual benefit. It might be useful to think about dating before you marry. In other words, think about the use of strategic alliances. That's sometimes a less costly and less risky way to sort of test the waters on a potential acquisition, by working together a little bit first and seeing if there's some mutual benefit there and if you work well together. You've really got to watch the purchase price. And that means you gotta be very careful not to over-leverage and incur too much debt in making an acquisition. Again, the odds are not in your favor of an acquisition being successful, so you wanna make sure that you don't completely put yourself in an unfavorable financial position by way of leverage to make that acquisition. It's important to focus on what we're good at, what our competencies and capabilities are, what our knowledge is, and how will acquisition increase the value of our competitive position. Does it make sense to acquire this particular target, and is it obvious how we might be able to create more value together than we did separately? And finally, it's important to work hard on the integration. It's important not to underestimate the difficulty of integrating the two companies, the two businesses. It's a very difficult part of a merger or an acquisition, and it's one of the primary reasons that acquisitions often fail, is that the integration proves to be more difficult than anticipated. So there's some tips for thinking about how you might increase the potential success of an acquisition once you've analyzed it using the acquisition analysis.