01 Challenge

Through M&A (Buy & Build) companies can make necessary leaps in the competitive marketplace. M&A can, for instance, help companies to take advantage of the benefits of scale that results from consolidation in mature markets and to gain access to new technology, markets, products and distribution channels. It can also help companies respond to unprecedented disruption in industries such as financial services, technology and energy.

02 Value

In our opinion, an M&A strategy should:

• Be specific about how M&A complements organic growth
  
• Include detailed information on M&A targets and criteria.
• Include detailed information on which countries and markets should M&A activities be focused?
• Throughout the acquisition process a company should stick to the criteria set out in its M&A strategy in a disciplined manner.
• Have a sound financing plan, specifying the impact on the financial solvency and credit rating of the company.
• Management should firmly stay in control of the deal and the acquisition process.

03 Post deal

Post-deal integration should not only focus on managing risks. It should also allow for the discovery and capture of new sources of deal value that were not visible prior to the closing of the deal. In this respect, the distinction between deals focused on scale and cost synergies (‘related’ deals) and those focused on extending scope and the acquisition of new capabilities and technology (‘unrelated’ deals) is relevant. Integration of ‘related’ deals can be better planned and executed compared to ‘unrelated’ deals, which are more transformational in nature. Unrelated deals are more risky, because it may fundamentally change the way a company does business.