First, the bad news. HBR cites research suggesting that 60% of significant mergers actually destroy shareholder value. Other published research notes deal failure rates of anywhere between 50% and 85%. One KPMG study found that 83% of deals were unsuccessful in delivering any discernible business benefit. A separate study by A.T. Kearney concluded that total returns on M&A were negative (source). … Read more
Closing a deal is difficult – however, the capturing of synergies post-deal is arguably even more difficult. The objective of M&A is to create value – yet once the dust has settled, “deal fever” has subsided and post-merger integration is underway, it is easy for an acquirer to lose sight of the goal of synergy capture. For a … Read more
Across the M&A life-cycle, post-merger integration is one of the most critical processes to ensuring a successful acquisition. While taking a prudent approach to valuation and not overpaying for revenue synergies can go some way to preventing a failed integration, there are other key factors which, if approached correctly, can significantly increase the chance of integration success (or … Read more
An M&A strategy might make perfect sense on paper, but the core driver – people – can easily be ignored. While for many organizations hard facts relating to revenue and costs lie at the heart of the deal rationale, the less tangible, human side of M&A can be equally important. Indeed, in today’s era of … Read more
Many acquisitions are justified on the basis that they will create synergies – being when the combined post-merger integration value of two companies working as one is greater than the aggregated pre-merger value of both companies working independently (the concept of 1 + 1 = 3). Carefully managed, synergies can contribute to value beyond the sum of … Read more
Post-merger integration (PMI) is a fundamental stage to realizing the value of an M&A deal. It is a complex process, usually occurring under extreme time pressure while maintaining business continuity. There is no one-size fits all approach to successful post-merger integration. However, careful planning, focusing on the strategic objectives of the deal and the identification and … Read more
Environmental concerns are becoming an increasingly important part of M&A due diligence, yet they are still often overlooked. The key objective of environmental due diligence is the identification of all material environmental risks that may affect a transaction, either pre- or post-closing. Environmental issues can significantly impact the valuation of a transaction from the Acquirer’s perspective … Read more
IT due diligence should paint a clear picture of how technology helps the Target run its operations and whether there are any “deal breakers” that would cause the Acquirer to abort the transaction or to seek a price reduction (for instance, due to significant capital expenditure being required to upgrade IT systems). IT M&A due diligence is becoming increasingly … Read more
1. Tax Compliance The starting point of an M&A due diligence tax exercise should include a detailed assessment in order to determine whether the Target presents any compliance risks – this may include a review of all relevant tax filings and details of any open/closed tax inquiries with the relevant authorities. Taxes that fall under such an … Read more
People usually love the idea of standardizing their M&A playbook and building an “M&A machine” or an “acquisition factory.” However, the immediate follow-up questions are: How much you can really standardize the M&A process? Does it depend on whether I do many smaller deals or a large mega deal? Smaller deals typically follow a more standard … Read more