Mastering the Merger Four critical decisions that make or break the deal
Mastering the Merger
Home Buy the book Contact Bain.com
Mastering the Merger

Success at deal making is no small feat. Dozens of studies have indicated that 70 percent of major deals fail to create significant shareholder value. Yet it's extremely hard to build a world-class company and meet investors' expectations through organic growth alone.

It's a classic damned-if-you-do, damned-if-you-don't conundrum: Mergers go bad more often than not - but mergers are indispensable. So how does the forward-looking executive reconcile the low probability of deal success with the need to build acquisitions into a company's growth strategy?

Kellogg & Keebler: Critical decisions that make or break the deal
Newell & Rubbermaid: Critical decisions that make or break the deal

The answer is, be disciplined in decision making, and focus on the critical decisions that make or break the deal:

  1. How should you pick your targets?
  2. Which deals should you close?
  3. Where do you really need to integrate?
  4. What should you do when the deal goes off track?
Resolving those crucial deal issues is not a matter of following a step-by-step checklist or crunching the latest valuation formulas. In fact, focusing on technical razzle-dazzle or inch-by-inch integration techniques can actually distract deal makers from the big picture. Rather, decision-making success comes from practicing four key imperatives:
  1. Invest with a thesis.
  2. Ask and answer the big questions in due diligence.
  3. Integrate quickly where it matters.
  4. Expect the unexpected.

But one great deal rarely serves as a foundation for sustained shareholder value.  To be consistently successful, you have to organize and institutionalize your M&A functions to create discipline around the four deal decisions.

Deal success is not random. By bringing rigor to a handful of key decisions, over time, you will master the merger. And you will accomplish more than that. You will wield one of the most powerful corporate tools and gain control of your organization's fortunes. And that is the true promise and potential of mastering the merger.

 

© 2005-2011, Bain & Company  |  Terms of use  |  Privacy