Rethinking business models

  • transaction

"The media industry has been struggling for years" sounds like a quote from ‘Captain Obvious’ — but while it may be common knowledge, potential solutions to the problem can be more obscure and unusual. That was definitely the case in the work that we conducted for one of Finland’s oldest publishing houses, A-lehdet.

One of a kind

Founded almost 90 years ago in Helsinki, A-lehdet has a long legacy in publishing print media but has become a ‘jack of all trades’ in recent years. And while many other companies in the media industry face hardship by trying to persevere in their traditional field, family-owned A-lehdet has chosen a different path.

In the past, it was feasible to subscribe to a single newspaper and see all your needs and interests covered. Since the boom in digital media, however, the sheer number of media outlets (and potential niches to be covered) has seen an exponential explosion. Readers don’t identify anymore with a single media outlet. And to make things worse, digital readers frown upon subscription models. So, what publishing houses needed to do was to rethink their anachronistic business models. What sounds obvious from the outside is a skirmish with the future for an entire industry.

Meanwhile, A-lehdet Group – consisting of multiple media outlets, the Finnish Design Shop, Genero, Franckly, and Keskisen Kello – is beyond the navel-gazing of its peers. The growth of e-commerce was realised early on, and successful online retailers of lifestyle products were brought into the group alongside the strategic and marketing expertise of Genero – which offers obvious synergies in this setup.

Just ten years ago, there wasn’t such a buzz about e-commerce, while today, A-lehdet considers itself an expert in the field. But the company is not satisfied with this already impressive display of diversification. Being a family-owned business, A-lehdet has a keen sense of history and the company’s place in society, wanting to make sure it will also be around to experience the next hundred years. Rather than thinking about shareholder value in quarterly results, A-lehdet instead thinks in quarter centuries, roughly the same amount of time each family member has to leave a unique mark on their heritage.

Tying together journalism, content creation, and commerce

When Eero Toppinen (Senior Associate, Vertical) arrived at A-lehdet’s headquarters in Kulosaari, Helsinki, he was greeted by Kaisa Ala-Laurila (CEO) and Anna Ruohonen (Director, Media). As members of A-lehdet’s management team (of which five of six are female – Go Finland!), they laid out the company’s expansion goals. The brief was simple yet challenging: to strengthen the group’s ‘future proof’ setup by adding another diversifying element. The aim was to tie together journalism, content creation, and commerce to fulfil and expand the needs of a growing demand niche.

Matching the needs of small companies and start-ups with the expectations of large and established businesses can be tricky

To ensure that A-lehdet needs were thoroughly understood, a series of facilitated discussions were conducted – some of the last face-to-face conversations took place before the pandemic put an end to personal contact. Equipped with A-lehdet’s strategic goals, Vertical began its targeted company scouting. A month later, the team had compiled a longlist of prospective growth companies and a carefully jointly curated shortlist of those companies with whom further conversation was warranted.

Communication is vital to ensure clarity for all parties. Regular and frequent touch-points ensured that Vertical pulled all the right strings and kept its ducks in a row. With initial discussions and interest mapping done by Vertical, A-lehdet leadership joined five companies that showed the highest potential for the Value Proposition Day. Synergies and concerns were already discussed upfront prior to A-lehdet getting the opportunity to meet each company and their leadership one-by-one. Vertical moderated the conversations, touching upon previously identified critical topics. In the final debrief, all discussions and insights were summarised and emerging alignments with A-lehdet’s goals documented.

To facilitate the VPD workshop format, Vertical prepared an analysis consisting of company financials, growth strategy, outlook, ownership, and company culture. Though most of these criteria are quantifiable, company culture is a much more elusive matter.

While Vertical can’t go as far as evaluating individual relationships, it is possible to deduce important insights by interviewing key figures within the company. Those conversations aim to unveil whether the team trusts itself, what their dream scenarios for the future are, and the overall functionality of the team. While not every detail can be mapped, Vertical takes cultural due diligence very seriously and considers such a comprehensive analysis a default deliverable.

In today’s business climate, acquisitions often go wrong because the cultures of the different entities are not aligned. The reasons for such instances aren’t surprising – the matchmaking occurs between parties which often couldn’t be more different from each other. It is important to both respect long-established traditions and take care that potentially disruptive fresh approaches are not being suffocated by old ways of working. Finding the middle ground through communication and openness is the key to success.

“The value proposition day was one of the best tools for aligning on an acquisition strategy that I have seen in my career!”

– A-lehdet management team member

The most obvious targets, which initially drew attention, turned out not to be the best fit

After undergoing the series of facilitated discussions and the VPD workshop, one company was selected to engage in investment discussions with A-lehdet. During these proceedings, Vertical facilitated a series of Joint Value Proposition (JVP) workshops to help both partners in understanding how the target company would function as a part of the group.

Turning over every stone and taking the time to scratch beneath the surface paid off in the identification of a qualified match. The JVP workshops helped A-lehdet map out areas of common resources, synergies, company culture, and ways of working in addition to crafting detailed shared plans for the upcoming years; and finally, A-lehdet gained a structured view of the market and an “acquisition strategy” that will enable the company to pursue ventures alone in the future.

Outcome summary

  • Structured acquisition strategy for the Finnish media market
  • Market analysis on the nordic media market
  • Identified top acquisition targets within the agreed strategic, geographic, and company size scope
  • Analysis of the strategic fit and outlook for top acquisition targets
  • Hands-on support for the top management to narrow down the acquisition targets to top companies
  • Facilitation of negotiations with top acquisition targets through the Joint Value Proposition framework
  • Recommendation for an investment structure and a target company

More details?

Please get in touch with Eero Toppinen if you should have any questions or if you need more details.

Eero Toppinen

Transaction | Collaboration

+358 40 674 0000

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