Congratulations, You are the Successful Bidder! Oh Dear… What Now?

Corporate Finance & Restructuring

February 7, 2018

roads

I liken this title to the recent US election. It seems many thought Trump wouldn’t win, so there didn’t appear to be a solid post-election plan in place and the carnage that followed was a direct result of this lack of planning. So too is the case in business particularly around mergers and acquisitions. The need to develop that plan is paramount.

OK, so you have successfully acquired the business to take your organisation to the next level, so what now? Well to be honest if you are only just now asking yourself this question, then you are likely to fall in to the 70 to 90% bucket of failed mergers and acquisitions1. Failure in that they fail to deliver any boost to shareholder returns.

The fact of the matter is most acquirers spend a considerable amount of time identifying the synergies that a merger will yield - in most cases over-estimating these synergies - but then spend little time working out how they plan to extract these synergies. It is the merger integration that often lets acquisitions down and the failure to develop a sound plan to execute on post-merger. It’s as if teams are so busy popping the champagne corks to celebrate the successful bid they forgot about the hangover that lurks behind the fifth glass.

1As highlighted by the Harvard Business Review article “The Big Idea: The New M&A Playbook”

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