Win the M&A Game… Before You Even Start Playing

Win the M&A Game… Before You Even Start Playing

Take the M&A Readiness Test

Everyone knows the usual statistics regarding long-term M&A performance – review the most recent set of statistics and you’ll find that, as a general rule, a third of all deals add value to the combined business, a third destroy value, and a third have little significant impact. Not a great track record overall, and little changed in over 30 years, but – for those who have found a way to do it consistently well – M&A is a true competitive differentiator for their business. Xstrata grew from nothing to a global mining superpower with a market value of over £20bn in just over eight years, largely through M&A.

GE, Microsoft and others across sectors have turned M&A, and more importantly post-merger integration, into core capabilities; and their ability to consistently, reliably buy and integrate other businesses have transformed their organisations and market values. Others meanwhile (and I’ll mention no names), continue to acquire regularly, and continue to do so badly, depressing their performance, distracting their leadership, and on occasion risking their own ability to survive. It’s a hard but evident and well-researched truth: some organisations are inherently better at M&A than others.

Having seen both sides for ourselves over the years, we at BTD investigated the factors that contribute to M&A success a few years ago, details of which can be found in our report, Inconvenient Truths (2013). Through this research, even we were surprised to discover that organisations who apply the right mix of approach, leadership culture and behaviours see a more than 4x increase in long-term benefit from M&A relative to those who do not. If you prefer an objective measure, they also happen to enjoy a 3-year increase in market capitalisation over double that of their peers who do not.

So before embarking on your next acquisition, the important question is not, “Is this a good deal for our business?”, but rather, “Is my business ready to deliver good M&A?”.

We’ve worked with dozens of organisations since 2001, and as a result are able to tell fairly quickly which of our clients are likely to be successful at M&A; we know it even before a potential target appears on the horizon. We know the right mix of culture, leadership behaviours, experience, processes, tools and templates are needed, and which are most critical to success.

To support the launch of our new website, we’ve decided to share this knowledge in the form of a simple survey: BTD’s M&A Readiness Benchmark. Using 44 carefully selected questions, the Benchmark assesses the specific attributes and conditions of high-performing acquirers, those that make a real difference to M&A performance regardless of deal size or sector. Not just a restatement of the traditional success factors describing what you do along the M&A and integration process, our Benchmark also considers what really makes M&A work for the long-term: who’s involved, when they contribute, and how they behave. Without these conditions in place, deals succeed less than 20% of the time. With them, success rates jump to over 70%.

Is your business ready for M&A? How do you compare to your peers? If you represent a corporate acquirer or Private Equity investment firm and would like to find out, you can complete the Benchmark at:

Watch this space for future releases of Benchmark results and analysis.