Danaher The Making of a Conglomerate Case Solution

1. What are the challenges Danaher is facing to sustain their growth and what should they do to keep it and grow?

Challenges Faced by Danaher Corporations

Danaher is struggling to achieve sustainable growth along with another challenge which is to create a balance between organic and acquisition-oriented growth. These challenges occurred when they were already struggling with challenges that were aroused due to successful acquisition. The careful observation indicates the multiple reasons which are the potential causes behind these challenges. These causes are the expansion of private equity firms, stalling cash flows, and depletion of possible acquisitions. Moreover, the company has mainly focused on SMEs when planning to target new businesses. However, with the recent cost increments in mergers and acquisitions, Danaher now faces this challenge in decision making with two possible options; either acquire more companies at a rate of knots or change their focus and start targeting larger and more established firms. Although, Danaher is capable to take care of both the issues; depletion of possible acquisitions and halted cash flow but it is to be noted that the company does not have the power to leash its full control over the growth and expansion of private equity firms. The reason is that private equity firms possess huge capital to spend on acquisitions. In addition, these firms are also capable of acquiring the bigger target with no hustle, hence creating difficulties for Danaher to transform large and well-established organizations. Also, it is conjugated with the slow US and global economies which results in limited natural organic growth. Further to more, the fractions of the company’s existing portfolios are conditioned to fluctuate in end markets which in return makes the cash flows less foreseeable and the acquisition of large businesses riskier.

Proposed Assumptions 

Considering these challenges, it is best for Danaher to utilize cash flows for value-added acquisitions as it will help in maintaining higher growth rates. Moreover, the active search to find new target businesses is also crucial at the point, especially when battling with other private equities such as Bain Capital and Blackstone Group.