M&A: Potential, But No Guarantees
The vast majority (87.1%) of participants to the NAPL Mergers and Acquisitions Survey that have completed at least one M&A transaction indicated that their overall experience was positive. However, only about one in three companies (37.1%) reported that M&A exceeded (9.7%) or fully met (27.4%) expectations. For the remainder, M&A only met some expectations and not others (56.5%) or fell far short (6.5%).
Of course, every situation is different. But we can—or should—learn from every situation, whether a deal is completed or not. Furthermore, what others have experienced can be a valuable resource. We asked companies that had completed at least one M&A transaction the following: What would you advise someone considering M&A for the first time? Their suggestions were quite varied but fell into several broad categories.
• Consider cultural and integration issues as carefully as the financials.
• Be realistic/discount expectations, and plan for downside risks.
• Structure the deal to pay for what is, not what was.
• Get into the details for all aspects of the business, not just the headline data.
• Get help, don’t go it alone.
• Always be prepared to walk away.
This is certainly sound advice, and who better to learn from than those that are or have been in the trenches. There is no question that M&A can provide a wealth of opportunity going forward—to expand/diversify one’ client base, to fill excess capacity and cut overhead, to offer new products and services, to enter new markets, etc. But there is no guaranteed path to totally eliminate the downside risk associated with M&A. The best we can do is to attempt to reduce it as much as possible.
Andy Paparozzi Joe Vincenzino