We’ve probably all heard people say that most mergers and acquisitions fail.

In fact, many articles have been written on the subject. They often point the finger at inferior due diligence processes or deal team construction, cultural and leadership style mismatches, rubbery accounting, missing synergies and bad integrations, etc.

Whilst these are important elements they can to a small extent be tolerated if the key deal motivation is properly founded on strategy.

And that’s the real point - the most important difference between M&A success (‘good M&A’) and failure (‘bad M&A’) is strategic motivation.

Good M&A is motivated by and aligned with business strategy and often requires one or more transactions that:

• combine businesses and/or re-house assets in a way that extends and evolves the combined/new business, and/or

• reshape an industry landscape to deliver a sustainable advantage, and/or

• materially add to/improve the capabilities and competencies of the new business.

Bad M&A is motivated by fear, vanity, hubris, chasing non-strategic scale for the sake of size, fees or leadership team incentives, and a range of other motives. More often than not and despite the math-based recommendations of experts, these are rarely in the best interests of shareholders.

“Bad M&A almost always fails. Good M&A seldom fails.” NextLevelCorporate.

I recently released our newsletter, NextPerspective, which focuses on two of the best M&A deals in 2019, both of which were strategically motivated.

You can access the web version of our newsletter here.

I hope you enjoy and find it valuable, and if you would like to receive future newsletters by email, you can subscribe here.

Best wishes for 2020!

Mike Ganon

NextLevelCorporate is a leading financial & strategic corporate advisory firm with a multi-decade track record that speaks for itself. Helping clients in all industries to prepare for, respond to and deliver transformative corporate finance strategies and transactions in and out of Australia, is our passion.