Mergers and Acquisitions

Mergers and Acquisitions

In this article, Jeffery Perry writes about frothy mergers and acquisitions, synergy expectations, and integrations.

Despite the business challenges of the global pandemic, global mergers and acquisitions (M&A) activity in 2021 has been at record levels across sectors. For corporations, private equity (PE) firms, and special purpose acquisition companies (SPACs), when M&A deals happen, headlines rightfully focus on valuations and strategic rationale. For corporate combinations and PE rollups, synergy expectations and integration approaches garner a great deal of attention as well. However, for M&A to be fully successful, there is a need to navigate through a series of unsung risks, most notably the internal controls environment of the acquired entity. Unchecked controls can negatively impact the achievement of goals and objectives that grab headlines and attention. 

According to Bloomberg, global M&A deal value through three quarters of 2021 reached $4.28 trillion, exceeding the all-time annual record of $3.96 trillion set in 2015. There has been robust activity across sectors including technology, healthcare, financial services, media, energy, and manufacturing. Corporations have led the way, representing 60% of deal value, followed by PE at 32%, and emerging SPACs at 8%. Going forward, there appears to be a strong pipeline of M&A potential through the remainder of 2021, leading into 2022. While supply chain disruptions, inflation, and labor shortages may put a damper on some M&A activity, this has yet to materialize. Buyers thus far have managed to “walk and chew gum” as they pursue deals.

 

Key points include:

  • Synergy expectations
  • Integration approaches
  • The internal controls environment

 

Read the full article, Beyond M&A Flash, Winners Manage Unsung Risks, on LeadMandates.com. 

Alessandro Santo shares a post based on an Interview with Fredrik Cassel on Creandum on the connection with Spotify.

We first met Spotify in spring of 2007, and later Creandum Fund II led the firm’s first venture round of funding. Ten years later we’re hearing Creandum partner Fredrik Cassel brag too much about being user 700-something, so we we decided look at that moment where we first signed up. This interview can also be found on our website.

Creandum: So take us back and give us the Creandum/Spotify story. Thinking about timing, Creandum had just raised Fund II where the firm could start focusing on software and web, rather than the old focus on semiconductors and hardware in Fund I.

Fredrik Cassel: Yeah it was a wild start. I can still remember it because I’ve thought about it so many times.

It actually all started at my old school — the KTH school of Technology in Stockholm where I was sourcing new deals. I was watching a webcast of what had happened earlier in the day and there was this guy Andreas [Ehn, the first CTO of Spotify] on stage pitching this new company. He wasn’t saying anything about what they were doing but somehow it seemed very interesting. And I could tell from the audience that they had a lot of respect for the guy and the venture he was building, even though he didn’t say too much.

So I reached out to learn more. He said that the company was called Spotify but he wasn’t the guy I should speak to, I should talk to someone called Daniel. He put me in touch, I gave Daniel a call, and he asked me “Creandum — who are you guys?” and I gave the backdrop and told him what we were up to: changing the fund focus and really swinging for the fences.

 

Read the full article, 10 years later: Getting to know Spotify before Series A, on LastMileVentures.com. 

 

Umbrex is pleased to welcome Neeraj Monga with ANTYA Investments. Neeraj is a top-ranked investment professional with extensive experience in forensic accounting, corporate governance, fundamental equity analysis and thematic research. Over a successful career spanning twenty years in global investing and advice, Neeraj has assisted clients in avoiding torpedo stocks that decimate portfolio performance. Neeraj focuses only on actionable and strategic investment advice and avoids the EPS-based rat-race that provides little value-added information to institutional investors.

In his consulting practice, he advises clients on M&A and acquisition-related due diligence as an independent advisor to directors. Many global companies such as HP, Caterpillar and others have been burnt by buying far-flung businesses that had to be written down due to sub-optimal due diligence by advisors, investment bankers and the management team.

He also advises teams on go-to-market strategy for new products, entering new geographic areas, and identifying new customer segments. All advice is data-driven, fact-based and provides actionable implementation plans. Numbers, details and ideas speak naturally to Neeraj.

If you are looking to add tremendous value in the shortest possible time on a complex project, then he is your man. Neeraj can provide leadership training, lead and coordinate top-management idea generation summits, and challenge top-management teams to stress test ideas and projects to ensure a winning outcome for everyone.

Umbrex is pleased to welcome Richard L. Koppel with MilestoneCVC. Richard has over 35 years of domestic and global experience in management consulting, transformation/change management, and technology operations/partnering. He has lived and worked throughout Europe, Asia, and North America. He maintains a global reputation in technology, enabling innovation for transformational change.

He has significant M&A experience including delivering numerous post-merger integration programs across the financial services, professional services, and entertainment industry sectors. He has held senior roles including Consulting Partner & CTO for PwC (formerly Coopers & Lybrand), Partner & CIO McKinsey & Company, and Sr VP Research & Development IGT (formerly GTECH, Corp).

Richard is available to work in the US, UK, or internationally.

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.

Umbrex is pleased to welcome Giovanni Fontana Giusti with Stradé. After an engineering degree and an MBA Giovanni started in consulting in a French consulting firm (Bossard) then in Bain London and Sydney. After that he worked as an executive, then as a CEO/Business owner in the luxury business on one hand, and in the TIC industry (Testing, Inspection and Certification).

Now he works as an independent consultant in Italy and in France.

Umbrex is pleased to welcome Joy Fairbanks with Fairbanks Venture Advisors. Joy is an experienced founder, investment evaluator, and advisor to high growth, innovative companies across sectors. Prior to forming her own boutique advisory, she served clients at LEK Consulting and Mitchell Madison Group where she was an engagement manager.

Joy has extensive experience advising companies across geographies from M&A and strategic planning to process improvement and supply chain management. She advises on business modeling, customer discovery, MVPs/prototyping, product/market fit, go to market strategy, fundraising/investor presentations, partnerships, operations, and financial forecasting.

Joy is an active advisor across accelerators and university startup communities including: Blackstone Launchpad (powered by Techstars), Venture Out, Inventor to Founders (I2F) Cyber NYC, StartEd’s NYU New Media Lab, Stanford University’s Lean Launchpad, and Columbia University’s Entrepreneurship Design Studio.

Joy is open to collaborating on projects of various types, particularly those that make an impact on people, markets, and the planet.

Umbrex is pleased to welcome Marco Piacentino with Soir Bleu. A blend of strategy, operations and M&A consulting activities are the characteristics of Soir Bleu srl, the firm that Marco founded in 2012. The aim is to provide clients with an advantage point through a comprehensive, generalist view of their business with a touch of specific industry knowledge.

Before 2012 Marco has been Senior Partner in charge of the ICT and Business Services Practices at Cross Border s.r.l., an M&A Boutique, member of Global M&A an International Network focused on Mid Market Transactions. His industrial professional career includes more than ten years at the Olivetti Group where he managed subsidiaries in Europe, Asia And Latin America. Marco also covered Corporate positions with international breadth, including VP Marketing EMEA at Unisys. International M&A projects, JVs and Corporate Counsel for Italy are the areas where Marco looks forward for collaboration with other professionals.

Umbrex is pleased to welcome Peter Korponai with Hungarian Enterprise Development Institute.  Peter has been running his strategy consulting practice since 2011. Peter started his career in consulting at McKinsey, where he spent 4 years working mainly for banking and energy sector clients in Hungary and neighboring countries. After McKinsey, he worked in line management as CFO in the medical device manufacturing and interactive media sectors.

In 2007, he returned to consulting and joined CEMI, a Central Eastern Europe focused strategy boutique founded by McKinsey alumni. Peter has extensive experience in the area of strategy, restructuring, M&A, and investment management. He has been serving VC and PE clients as well to enhance value creation at portfolio companies.

Peter lives in Budapest, Hungary and he is happy to collaborate on projects involving the above mentioned topics.

 

Jeff Perry shares a post that identifies the positive potential of divestitures in a company’s growth portfolio. 

Houston, do we have a problem? While many companies talk about the need to regularly reshape its portfolio, divestitures are too often considered aborted missions. Quite the contrary, divestitures can be rocket fuel for other business priorities of the parent company.

Divestitures are unsung in portfolio-shaping. When businesses are rumored to be for sale, many questions are raised internally and externally: Why is the business on the block? Is it underperforming? Was it starved investment? Was required management talent lacking? Why would the business be of more value to someone else?

Divestitures are not typically afforded the buzz and attention of their M&A cousins. When companies announce major acquisitions, there is often great anticipation and excitement regarding how the newly acquired entity will drive growth, expand geographic markets, expand products and services, and/or improve supply chain efficiency. High potential leaders in the business lineup for roles to help in acquisition and integration processes.

When divestitures are considered, first, there are fewer people “in the know.” When it is more known that a business may be a divestiture candidate, in addition to the questions highlighted above, high potential leaders often run for the hills. People may experience changing allegiances throughout the divestiture process as well. While everyone starts thinking on behalf of the parent company, some will shift to wearing the hat of the divested business, especially if they are ring-fenced and going with the deal.

 

Key points include:

  • The barriers to overcome
  • Creating value
  • Capital raised

 

Read the full article, Divestitures Can Be Rocket Fuel, Not Aborted Missions, on LeadMandates.com.

 

Umbrex is pleased to welcome Rodolphe Lebrun with LDP Partner.  Rodolphe Lebrun is an advisor and interim executive for biotech, medtech and biopharma. He spent 5 years at McKinsey focusing on Life Sciences and led commercial excellence at AbbVie Belgium for 2 years. Prior to McKinsey, he was a R&D project manager in aerospace within the Safran group. Rodolphe supports Life Sciences companies across their lifecycle: raising venture capital as interim CEO for startups, reviewing go-to-market strategies in scale-ups and improving biologics manufacturing in Big Pharma. He lives in Belgium and serves clients mostly in Europe.