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MERGERS AND ACQUISITIONS
The majority of
organizational growth strategies contain Mergers & Acquisitions as an
important segment of representing new direction.
For a corporate buyer,
an acquisition involves merging one or more independently owned
businesses with its own. The acquisition can be justified by economies
of scale or scope - both enhancing the core business - or it may be a
new platform, representing a diversification from the core business.
In any merger or
acquisition, the goal is to create and capture value that more than
offsets whatever price premium paid by the buyer. Sometimes, this can be
achieved through financial engineering, e.g., tax benefits, using
leverage, or divesting non-core assets.
However, acquirers are
finding that financial engineering opportunities are decreasing and
value must b created by cutting duplicative costs, transferring best
practices, and taking advantage of revenue opportunities like
cross-selling products.
Summit Advisors has
worked on transactions for its corporate and financial buyer clients,
and has been involved in all elements of the merger/acquisition value
chain, from screening through to integration.
A disciplined approach
to the acquisition process is vital to ensure success in a world where
all studies concur that most deals destroy shareholder value. The
disciplines are often ignored, thus the cost is enormous to shareholders
and other stakeholders of firms involved. The disciplines are:
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Investing with direction
- Acquisitions are growth strategies. Successful M & A’s have an
investment policy that is based on a firm's portfolio needs and
basis of competition.
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Asking the big questions
- Focus on the few, big questions in due diligence that test the
policy.
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Integrating where it matters
- Prioritize getting at the key sources of value. Gain more by
integrating less.
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Planning for contingencies
–Things will go wrong. Know what you can and cannot do and prepare
for the unexpected.
Please contact us
for more information.
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