A Short Guide to Maximizing the Potential of a Merger

2015 was one of the biggest years for M&A deals as Dow Chemical and DuPont announced their

stunning merger. Despite the fact that deals such as Dell-EMC and Pfizer-Allergan might face a

few regulatory hurdles, the global M&A volume exceeded USD 5 trillion for the first time.

Why is there a boom in M&A?

Presently, a boom spans diverse industries and company sizes. Many companies

undertake the M&A route just to experience high growth and to improve its efficiency

as well as skill sets.

Seeing the current tepid economic environment, it is appropriate for a company to have

M&A strategies in place as they enable it to leverage the presence of inexpensive debt.

Businesses, these days, rely on a range of M&A activities; because through it only, they

can experience high profit—something that is difficult to experience when a business

relies on its organic growth alone.

A research study analyzing the deals that took place in the last 10 years stated that

those companies that were engaged in any form of M&A activities had a 4.8 percent of

total shareholder return; while companies that did not engage in any M&A activities

averaged only a 3.3 percent of shareholder return.

Because of all these reasons, today’s corporate players are witnessing the disruption (which is

fostered by merger integrations) as a tool to capitalize on the opportunities presented by

competitive markets.

Why some of the companies relying on M&A activities fail to perform?

Somehow the companies taking the M&A route to touch excellence and to provide their

investors more value fail to perform. And that is because these firms do not have a proper M&A

strategy in place. Because of a faulty merger strategy, the participating companies can face a lot

of problems; some of the issues are as follows:

In most of the situations, a company fails to execute their M&A strategies in a timely

manner.

There have been situations where both the companies (which are merging) have some

conflicting priorities.

Some unwanted changes, which the merger brings along, have proved to be one of the

common factors that initiate talent flights.

In the desperation to prove out the entire deal thesis, the participating companies focus

only on managing short-term risks and on capturing the identified synergies in due

diligence. And, resultantly, these companies overlook the realities presented by the

deal’s full-potential plan.

Because of these, it is important that a business (which is relying on a merger integration

strategy to grow and to improve) should leverage mergers and acquisitions consulting.

To find out more about our Mergers and Acquisition practice call Jim Gitney at (909) 949-9083,

email us at info@group50.com