Recently, there have been a number of high-profile mergers and acquisitions (M&A) such as the $40bn Heinz-Kraft merger reported last week and although success rates of M&A deals have improved from 35% to 55% since the year 2000, this still means that less than half of all deals are unsuccessful.
Technology is playing a greater part in the success of M&A deals and according to an InvestorDaily report, Forte Asset Solutions director Steve Prendeville said during his annual market commentary that technology is emerging as a disruptive force in financial services mergers and acquisitions, with a number of tech entrepreneurs looking to get into the financial planning market.
Companies such as Intralinks are developing solutions to help transform and make the M&A deal management process much easier. Their newest product, Dealmanager was developed to answer the M&A market’s call for a secure system of record that corporate development professionals can rely to manage early stage opportunities, the due diligence process, and other pre-and post-merger activities.
Firms have a variety of factors to consider and challenges to overcome when it comes to M&A, including choosing the right company to merge with and in a report published by Professor Scott Moeller last year called ‘Can We Do It? Yes We Can’ he outlines how companies can get M&A right.
Moeller explains that “M&A deals are like a complex engine with hundreds of moving parts that all have to work together precisely in order for the engine to run smoothly. When one part breaks, the engine freezes up. And fixing it can be both expensive and time consuming, not to say distracting.”
In his report, Moeller provides the following tips on how to attain M&A success:
- An organisation must retain customers by reaching out and listening to their needs.
- Having a general focus on the deal is crucial as the executive team should avoid moving on to the next deal and focus on seeing the deal through.
- It is important to not focus on the end target as every little detail must be carefully planned in order to reach the goal.
- A clear strategy needs to be clearly thought out and must be communicated coherently so every team member understands the aims.
- A flexible deal strategy is necessary as team members must be adaptable if circumstances change.
- Alternative options need to be put in place as if the main target is difficult to pursue or becomes unavailable, there is a Plan B.
- The team executive leads the team but every member is as important and they must operate as a unit.
- A focus on revenue and staffing is significant for success.
- Ensuring pricing reflects the full costs of integrating the target.
- The post deal integration phase must not be neglected as the long-term value-creation begins here.
Moeller explains that you must expect “bumps along the way and plan accordingly but, to come back to the original question, look for a company that can be integrated well with your own. Then, you increase the odds that the M&A engine will run smoothly.”
In the report Moeller states that if businesses show customers respect, perfect their leadership skills and take time to fine tune their strategy, M&A deals should be more successful.
