Mergers and Acquisitions- Strategies to Enhance Success

All M&A transactions are unique, the challenges are significant and the success rates are very poor!

Over the last several years, a great deal of literature has been dedicated to the significant uptick in merger and acquisition (M&A) activity.  This attention is likely due to two factors:

  1. the volume of capital invested each year
  2. the amount of capital and shareholder value lost due to failures in these transactions

Each year U.S. companies spend more than $2 trillion on M&A transactions and the failure rate of these transactions has been estimated at 50%-80%, based on numerous studies.

Most of the published analysis for improving the success rate is focused on the strategic buyer’s perspective, defined as a public or private company that buys another company usually in the same business or consumer segment. However, equally important and significant players in the M&A marketplace are financial buyers such as investment banks, private equity funds or private equity investors who acquire and integrate businesses.

In this paper, we will examine the lifecycle of a deal, the challenges of M&A from the buyer’s perspective and describe several root causes for failure and simple recipes for improving success rates.

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