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According to a recent global industry study by McKinsey & Company, companies with the best M&A results have stronger capabilities in post-close integration. We’ve found that high performing M&A firms use the diligence exercise to gain critical insight into the company, its management, key employees, its culture, and its customer relationships.
"It feels like everyone’s chasing the same deal," said one M&A executive we interviewed. With multiples still at their highest, there’s even more stress on internal teams charged with being sure the acquisition is a good one.
So, why do 70% to 90% of all acquisitions fail to achieve the results acquirers want? Most often, failure is directly tied to the integration plan.
According to a recent global industry study by McKinsey & Company, companies with the best M&A results have stronger capabilities in post-close integration. We’ve found that high performing M&A firms use the diligence exercise to gain critical insight into the company, its management, key employees, its culture, and its customer relationships. They take a hard look at not only the financial numbers, but at the intangible assets that drive a company’s success plan.
Importantly, they have tools and processes to statistically document the value of the intangible - to help them see into the future. In essence, they start building relationships with the potential target throughout the due diligence process, months before close.
In every case, the expectation post-close is that the value of the deal will increase. So how do you put a predictor on future success? Here are ten traits we see in our highest performing clients’ best practices in M&A:
When we evaluate all the successes of our clients in M&A, we know the highest performers identify sustainable competitive advantages that are pulled directly from their Due Diligence Pre-Acquisition discovery - regardless of the deal size, shape, or industry. For them, following these ten steps has become second nature. For their target companies, these steps provide a great launching pad into the future. Importantly, for both acquirer and acquired, it’s a win-win.
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Strategex's Private Equity Solutions offer a whole new approach to due diligence and value creation for private equity and investment professionals. We use customer insights, market assessments, and 80/20 to help our clients close with confidence, expedite growth, exit faster, and maximize MOIC.
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