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A simple M&A model for all seasons

A simple M&A model for all seasons To discern what makes some acquirers more successful than others, Bain & Co. performed a 15‐year longitudinal study of 1,600+ companies in the US, the UK, France, Germany, Italy and Japan doing 11,000+ deals plus interviews with senior executives. Bain’s analysis of the companies that succeed at deal making and integration shows that they share some key practices which can be boiled down to this simple playbook: get into the game in good times and bad. If you’re not doing deals, your odds of outperforming go down relative to your competitors that buy steadily. Do not try to time the market. Start small. Cut your teeth on smaller, lower‐risk deals before you try the big ones. Build your team and your expertise in an environment where mistakes will have the least impact. Create a core deal team. Set up a standing team that will keep gaining transactional experience and will not be subject to much turnover. Pull the line in early. Ensure that line managers buy into the deal and that they know what they’re buying. After all, the operators are the ones who will have to integrate the acquisition and make it a success. Chill deal fever. To cool down deal fever, insist on high‐level approvals for deals or set up the compensation system to tie rewards to the long‐term success of the business, rather than deal completion. Most important, set a walk‐away price and be prepared to walk away from a deal that doesn’t meet your high standards. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategy & Leadership Emerald Publishing

A simple M&A model for all seasons

Strategy & Leadership , Volume 32 (5): 7 – Oct 1, 2004

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Publisher
Emerald Publishing
Copyright
Copyright © 2004 Emerald Group Publishing Limited. All rights reserved.
ISSN
1087-8572
DOI
10.1108/10878570410557624
Publisher site
See Article on Publisher Site

Abstract

To discern what makes some acquirers more successful than others, Bain & Co. performed a 15‐year longitudinal study of 1,600+ companies in the US, the UK, France, Germany, Italy and Japan doing 11,000+ deals plus interviews with senior executives. Bain’s analysis of the companies that succeed at deal making and integration shows that they share some key practices which can be boiled down to this simple playbook: get into the game in good times and bad. If you’re not doing deals, your odds of outperforming go down relative to your competitors that buy steadily. Do not try to time the market. Start small. Cut your teeth on smaller, lower‐risk deals before you try the big ones. Build your team and your expertise in an environment where mistakes will have the least impact. Create a core deal team. Set up a standing team that will keep gaining transactional experience and will not be subject to much turnover. Pull the line in early. Ensure that line managers buy into the deal and that they know what they’re buying. After all, the operators are the ones who will have to integrate the acquisition and make it a success. Chill deal fever. To cool down deal fever, insist on high‐level approvals for deals or set up the compensation system to tie rewards to the long‐term success of the business, rather than deal completion. Most important, set a walk‐away price and be prepared to walk away from a deal that doesn’t meet your high standards.

Journal

Strategy & LeadershipEmerald Publishing

Published: Oct 1, 2004

Keywords: Corporate strategy; Acquisitions and mergers; Shareholder value analysis

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