Mark Okerstrom has more experience than most when it comes to acquiring companies. As CFO and Executive Vice President, Operations of US travel company Expedia, Inc., he has overseen more than US$8b of acquisitions and divestitures, and he emphasizes that every deal is underpinned by a clear alignment with corporate strategy.
“We examine 50–100 possible transactions a year,” he says. “Every year, we take a close look at where we want this company to be in the next three to five years. We look at our organic prospects and the trajectories that all of our businesses are on and we see gaps – places where we want to either fill in white space in our existing portfolio, or we want to accelerate some of our capabilities or growth prospects. We fill those gaps with M&A.”
Naturally, there isn’t a one-size-fits-all model. “Every deal is different,” says Okerstrom, who explains that he has learned to address each potential acquisition on its own merits.
“If you take a deal like trivago [in which Expedia acquired a majority stake in the German hotel search company for US$570m in 2013], the thesis was: this is a great company which has phenomenal growth prospects. Yes, our global scale and our presence in the US – a market they wanted to enter – was helpful, but really the base thesis was that we had the opportunity to create a huge amount of shareholder value.”
Okerstrom contrasts that with the more recent acquisition of global online travel company Orbitz for US$1.3b. “There, we had a very clear deal thesis around the ability to realize significant cost synergies, at the same time as actually making the consumer product better and therefore driving revenue synergies. In that respect, it’s the complete opposite of trivago. With Orbitz, it was all about leveraging the Expedia platforms to create the value.”