Amazingly, 50-70% of all M&A deals still fail to achieve their full, stated financial objectives. After all the blood, sweat and ink that has been spilled warning about M&A failure factors over the years, many deals still destroy value outright or make little difference.
This is not just folklore. According to the most definitive study in the last twenty years, the Federal Trade Commission conducted a meta study (FTC Study: The Effects of Mergers & Post-Merger Integration) of approximately 60 academic, media and consulting firm studies, many of which were supported by empirical data, and came to essentially this same exact conclusion.
Quite simply, M&A is harder than most executives choose to believe. Failure can – and does -- happen at any phase of the process – strategy, due diligence, and of course, integration. There’s an old saying in the M&A business that “bad planning and poor execution will kill a good deal every time, but not even the best due diligence and integration can hope to save a bad deal after it is done.”
"...failure can -- and does -- happen at any phase of the process..."
Now the good news. Your organization can be one of the 30%. You can be one of the few executives who understand what it takes to get M&A consistently right. M&A is ultimately an experience-driven skill set. It can be learned. Success can be institutionalized. Applied consistently, an approach to M&A based on building an enterprise core competency around all aspects of M&A can and will make a difference. Just ask Cisco Systems, or GE or GE Capital, or one of a growing number of other consistently successful acquirers about the positive impact on revenue growth, profitability, market share, competitiveness, and of course, share price.
In our work with the M&A Leadership Council (macouncil.org), and in our research analyzing success secrets of the best acquirers over the last twenty years, we have documented a competency model that we believe provides both an instructive benchmark and a roadmap for you to follow to build the M&A skills, processes and insights to help you generate ROI through consistently successful deals. Stay tuned in the following weeks for an overview of the M&A Partners Enterprise-level Competency Model, or contact us for an advance look.
About the Author: Mark Herndon is President of M&A Partners LLC. He specializes in a broad range of strategic and business effectiveness initiatives, including M&A strategy, due diligence and integration management; financing and capital formation; strategy formulation and execution. Mr. Herndon is the co-author of The Complete Guide to Mergers and Acquisitions: Process Tools to Support M&A Integration at Every Level, (John Wiley / Jossey-Bass Publishers), which has been translated into five languages and is used as a foundational guide for various consulting firms and university programs.