Mergers and Acquisitions

Last year more than 7,000 mergers and acquisitions were completed, with a collective price tag estimated at more than $800 billion. However a third of these deals will fail and another third will not meet the expectations of the merger partners. What can businesses looking to undertake strategic mergers and acquisitions do to ensure that they create shareholder value?

"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

- Warren Buffett

There is no doubt mergers, alliances and acquisitions can add to profitability and grow shareholder value. Why then do so many fail or meet the expectations of the merging partners and destroy shareholder value? Was the merger ill-conceived? Or was it strategically good but poorly executed?

Successful M&As are the product of a comprehensive strategic plan and occur in market segments where the company can and will play in and win. When the company has focused its resources to dominate certain markets or market segments, the acquisition is merely a by-product of a successfully executed strategy.

How do you size up targets for acquisition? Acquisitions that meet risk and EPS targets may not meet EVA targets. How do you evaluate the non financial essentials of sales IT, R&D, and marketing and the people? What importance should you place on the target's culture, its management decision process, or how the company and its products are viewed by its customers?

How do you get everyone on the same page during the screening process to make sure that the handoff of the acquired business to an operating team will be successful?

Have you rescripted your strategic plan? How can you ensure this deal closes fast and well? Who is going to run the show? What are the absolutely critical tasks that must be done to make this acquisition a success? Why were those tasks chosen? How will they be done? Who will do them? What about the timing? What about communication to the new acquisition, and your new customers?

After the acquisition how do you focus your efforts on the 20 percent of activities that will drive 80 percent of the shareholder value and get the biggest impact in the shortest amount of time?

Caplix Partners has been on both sides of the table as operating managers and as consultants in deals totaling over $2.0 Billion and would like to be on your side.

Can we make a difference. We think so. Challenge us.