Are your investments creating the value you expected?
I have observed countless mergers and acquisitions that do not produce the expected returns. Often, candidate companies are identified for acquisition based on the perceived financial benefits to the overall bottom line. Leadership will identify companies for growth in an existing or adjacent market. All valid reasons to expend resources. However, when considering an M&A target, many leadership teams do not consider the integration risks and costs.
We found that the costs associated with the acquisition of a company are beyond just the purchase price. Integration of cultures and personnel, determining what works with the existing structure, and what needs to be realigned, seem to be discounted but are risks to the ultimate value the M&A creates.
We identify potential risks created by the M&A, like the additional investments that would be needed to integrate the target company, and conduct market analysis on their proposed offerings that show the risks and timelines for a return on the investment. Because of our analyses, we saved one company $100 million for the acquiring firm, allowing them to focus on their core market and grow.