During a live Q&A earlier this summer — Preserving the Spark: Realizing Value When Acquiring Smaller Companies — Galina Wolinetz, MD Integrations & Separations at Virtas Partners covered a broad range of considerations, challenges and watchouts that are unique to acquiring small, founder-led companies. We were unable to answer every question from the engaged audience … Read more
Last month, Galina Wolinetz, MD Integrations & Separations at Virtas Partners shared her insights on the acquisition and integration of smaller companies into larger ones using examples from her personal experience. During the live Q&A — Preserving the Spark: Realizing Value When Acquiring Smaller Companies — Galina covered a broad range of considerations, challenges and … Read more
1. Execute with confidence Post-merger integration (PMI) is a fundamental stage in realizing the value of an M&A deal. It is a complex process requiring careful planning and swift action while simultaneously maintaining core business activities. A successful post-merger integration typically requires changes in a company’s business operations, people, processes, culture and structure. Failure to … Read more
Introduction: While a conglomerate merger is still considered one of the more common types of mergers, these types of deals have waned in popularity after peaking in the 1960s and 1970s; this is perhaps in part because there are varying views on the true value of conglomerate mergers. Of course, the examples of Amazon and … Read more
Uncaptured Synergies from the Past Acquisitions During the economic expansion over the past 10+ years, many of our clients embarked on an ambitious spree of add-on, tuck-in, and even transformational acquisitions. Many of them were focused on building their target pipelines and executing deals. Sometimes they had time only for superficial integrations of the acquired … Read more
Whether the objective is obtaining a new business unit by acquisition or merger, re-organizing different divisions of a company or building up an in-depth partnership, a successful integration can be a challenge. Creating an operative base to reach strategic M&A goals may take a long time – indeed, post-merger integration processes often take much longer than expected, … Read more
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
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