07 Jun What Goes Up…
Does M&A add value to publicly-listed organisations?
This is, as the saying goes, the million dollar question, and the subject of
endless surveys, academic studies and consulting reports over the years.
A majority of these reports grossly oversimplifies the many factors and
externalities impacting deal success. Others lazily confuse correlation
with causation – does doing M&A increase long-term share price, or do
successful businesses do more M&A? Ultimately, most conclude with the
fundamental, albeit tautological lesson: Your enterprise value (as
reflected in the share price) will indeed increase following a merger or
acquisition provided the market believes that you have delivered a more
profitable business as a result of the deal.