DALLAS – February 5, 2021 Most M&A deals still fail to hit their full targeted strategic or financial objectives, but there’s a growing number of acquirers determined to outperform their competition by reinventing the way they do deals and integrate acquired companies.

“Pick up any study on M&A results over the last 20 years, and the overall data hasn’t changed much,” says Mark Herndon, Chairman of the M&A Leadership Council, “most authorities still find between 50-70% of all deals underperform their originally stated business result objectives. A big part of that is due to insufficient internal processes and skills. M&A deals can still fail in each phase of the process, and there are as many reasons for failures as there are deals. We observed a trend called the ‘deal-count paradox.’ Often, those companies with quite a few deals under their belts seem to get stuck in a rut, and it can be even harder to overcome the institutionalized bad practices that have caused problems all along but have never been addressed effectively.” 

Herndon continues, “What is driving improved results are those executives that view M&A as an end-to-end business process for strategic growth, and invest accordingly to upgrade their internal M&A process, resources, skill-sets, capabilities, and tools to fuel consistent and repeatable deal success, regardless of deal size, pace, complexity or strategic motive.” 

According to Herndon, one important component of a highly effective and efficient internal M&A process ‘engine’ is the use of an end-to-end and purpose-built M&A software solution to help companies codify and automate due diligence and integration to the greatest extent possible, reducing the sheer chaos of M&A by more effective coordination, collaboration, reporting and accountability for results. 

“According to a study of 150 experienced acquirers co-sponsored by the M&A Leadership Council,” Herndon states, “we found those organizations that effectively use a comprehensive ‘full-lifecycle’ M&A software solution can significantly outperform those organizations who do not use a similar solution. Improved results impacted essential strategic outcomes such as the ability to consistently capture cost synergies, increase the pace and quality of due diligence and integration, and minimize ‘value erosion’ – an M&A term for unanticipated negative synergies and business disruption due to M&A – in some cases by as much as a 65% improvement over the non-software user data set. Yet, the majority of organizations still report using strictly manual applications such as Microsoft Excel and PowerPoint, along with widely used, but limited, point solutions for due diligence data storage and access known as virtual data rooms.”  

Alan Croll, CEO, and Chairman of EKNOW, Inc., a software firm specializing in purpose-built M&A solutions observes, “Leaders are challenged to deliver to their stakeholders the promised value of M&A while simultaneously operating and growing the business, delighting clients, empowering employees and mitigating risks. Power tools reduce the time-to-value and reduce the risks in a way that is highly repeatable and proven to lead to better outcomes.” 

M&A software firms in this space are quick to point out that merely adopting an M&A software solution is no panacea but done right, they can and do make a big impact on results. Nick Perdikis, the CEO and Chief Revenue Officer of Devensoft adds, “The feedback we hear most often from customers is that they now have a repeatable process, single source of truth, and the ability to make better and faster decisions to optimize deal value across the organization.” 

Ari Salonen, CEO, Midaxo, adds, “We have seen our global customers build impressive M&A engines to run their deals faster, cheaper, and more collaboratively and – most importantly – to increase their win ratio, capture deal synergies, and meet their strategic objectives. The results are equally impressive for multinationals with mega-deals as they are for small PE platform companies executing their programmatic M&A.” 

John Bender, President of M&A Partners, a leading implementation partner of EKNOW, Devensoft, and Midaxo, agrees but quickly adds a caution. “Organizations that haphazardly select an M&A software solution or implement it poorly often find it’s merely a faster way to screw up a deal or integration. Instead, corporate acquirers should view M&A as a comprehensive strategic enterprise capability for growth, not a one-off transaction. Just like any enterprise capability, it takes an investment in creating the internal process, playbook, internal skill-set, decision authorities, change management, and appropriate resourcing to be truly successful.  When M&A software is implemented within the context of that kind of M&A readiness and maturity, it can be ‘rocket-fuel’ for growth.” 

Herndon adds, “given the amount of capital in the market, and the substantially increased competition for desirable target companies from fully-funded private equity firms and special purpose acquisition corporations (SPACs), many corporate acquirers are already challenged to move as quickly on M&A deals as more nimble PEs and SPACs. It is the perfect storm for traditional corporate acquirers – and those executives that view M&A as a one-off transaction or not equipped with a robust internal process, skill-set and software solution may simply not able to compete in the current M&A environment.” 

About M&A Leadership Council 

The M&A Leadership Council is an educational consortium of global professional service firms, experts, and corporate practitioners in the art and science of mergers, acquisitions, divestitures, and joint ventures. Over the past 11 years, the M&A Leadership Council and its partner organizations have trained over 4,500 executives, representing over 700 best-in-class companies from every major industry sector. The M&A Leadership Council actively supports corporate M&A practitioners through a variety of proprietary research initiatives and publications, online and onsite training programs, best practices, and an industry-first certification for corporate M&A practitioners, the Certified M&A Specialist (CMAS®). Learn more about the M&A Leadership Council at www.macouncil.org. 

To register to attend the M&A Leadership Council’s webinar on Wednesday, February 10, 2021, “Realize the Return-on-Investment (ROI) in M&A Software Solutions,” or view the replay, click the link.  

For a copy of the Webinar Transcript or to schedule a virtual meeting to discuss these issues further, please contact: [email protected]

# # #