Making M&A pay: lessons from the world’s most successful acquirers

Abstract

As the global economy starts to perk up, interest in mergers and acquisitions is once again building. Now is the time to confront the paradox at the heart of M&A. Although study after study has shown that most deals destroy value for the acquirer’s shareholders, why do companies proceed with M&A deals? Why does hope triumph over experience? Because, if certain fundamental rules are followed, M&A can create substantial value for the acquirer’s shareholders. This article shows that every industry has acquisitive exemplars and describes how they extract value from acquisitions for their shareholders. Acquisitive exemplars view M&A as a means to a strategic end, rather than an end in itself. They adopt five decision biases: Set the balance between organic and M&A‐led growth in your corporate agenda, according to the maturity and dynamics of your industry. Challenge the level of acquisitiveness in your business unit’s agendas, and make sure they are aligned with the dynamics of the industry. If the growth strategy needs to be biased toward acquisition, challenge your business at the both corporate and business unit level on the nature of these acquisitions. Develop the key M&A capabilities needed for success in your industry or market segment. Develop a fully accountable process and appoint fully accountable people to integrate your M&A decisions with strategy formulation and performance monitoring.