The odds of success with mergers and acquisitions are surprisingly low, but in this post, David Gross explains how to give M&A Transactions a larger chance of success.
Trillions of dollars pour into mergers and acquisitions (M&A) annually as companies seek to increase market share, reduce costs, differentiate, diversify, refocus, and capture other sources of value.
Unfortunately, M&A success is the exception, not the rule. A whopping 70 to 90 percent of transactions fail. This means, only 10 to 30 percent of transactions succeed. To put these terrible odds in perspective, let us turn to the gambling capital of the world, Las Vegas. The odds of winning in blackjack are 44 to 48 percent, much greater than the odds upon which companies stake their futures.
Though these statistics may seem grim, there are companies beating the M&A odds, and they’re beating the odds over and over again. But how do these companies, or “M&A Winners,” repeatedly beat the odds? After 20 years of dealmaking, we have discovered 5 hallmarks underpinning their success.
HALLMARK #1: M&A IS A DAILY ACTIVITY
They say practice makes perfect and consistency is key. The same is true for M&A Winners. These companies have specialized talent, or “dealmakers”, who focus exclusively on M&A strategy and execution. Dealmakers typically reside on the corporate strategy or corporate development team, or on the equivalent business unit team in decentralized organizations. They are adept at marshaling talent, information, and other resources across the company; keeping their eye on critical value drivers and interdependencies; and managing the deal process. Effective and efficient dealmakers pay for themselves many times over.
An alternative and frequently-taken path is to challenge a leader with operational responsibilities to manage M&A activity day-to-day. Unfortunately, this approach stretches buy-and sell-side leaders too thin and may result in underperformance on the deal and missed operating targets in the existing business. For the sell-side, missed targets may prompt the acquirer to demand a lower valuation and changes to other key terms.
Key points include:
- The benefit of a “dealmaker”
- “Tuck-in” or “bolt-on” acquisitions
- Over-investment in due diligence
Read the full article, Reverse the Odds: Give Your M&A Transaction a 70 to 90 Percent Chance of Success, on ConsultSVP.com.
David A. Fields identifies two issues consulting firms must overcome to win projects and asks four pertinent questions that can help you take the action needed to move forward.
Your consulting firm has probably encountered more resistance from prospective clients than usual over the past eight weeks. Fortunately, you can understand and overcome the elevated stumbling blocks.
The basics of winning consulting projects haven’t changed. Keep them moist and use lots of butter. No, wait. That’s for sheets of phyllo dough. To win consulting projects, your consulting firm still needs to outperform every alternative on The Six Pillars of Consulting Success.
However, the change and uncertainty that have swept the globe have also spawned two shifts in how prospects evaluate your consulting firm’s offerings.
Points covered in this article include:
- Heightened Risk Sensitivity
- Extended Time Horizon
Read the full article, Two Issues Your Consulting Firm Must Confront to Win Projects in Uncertain Times, on David’s website.