M&A Summary

Successful Merger & Acquisitions Strategies

In 2015, global M&A (Merger & Acquisitions) transactions hit $4.86 trillion, which was the highest on record for any year. Despite such high volume & activity, 66-75% of mergers and acquisitions fail. From bad strategy to ambiguous business models, there are a number of reasons to blame. Here are a few strategies that can ensure success of mergers and acquisitions:

1. Better Due Diligence

Majority of the respondents in a survey by McKinsey & Company agreed that over 40% of their M&A deals lack proper due diligence. Proper due diligence is essential to evaluate the target company’s actual state. It ensures the reliability of the financial records ( from cash flows to tax records) and helps in gauging the value of the company.

2. Understand the Culture

A good understanding of the company culture is critical to the success of M&A.

M&A deals

As the above data suggests, about 70% of the people feel that the cultural aspect is overlooked prior to M&A deals. 92% agreed that gaining cultural understanding would have added value to their M&A deals. Cultural understanding between the 2 organizations doesn’t only include the policies of the organization but also, the unwritten rules in terms of operation norms, measures for goal achievement, career development and building relationships.

3. Communicate Clearly

M&A deals are accompanied with confusion and uncertainty. Concerns fly high in terms of change in job role, pay package and leadership. Leaving these concerns unattended can result in unnecessary speculation and rumors which in turn, negatively impacts the deal. Communicate with the employees clearly. Meet them and share your vision, business model, and strategy. Analyze their concerns and share your findings with them. This help building a positive environment.

4. Focus on the Middle Managers

An article published in Harvard Business Review written by J. Keith Dunbar mentions that middle managers of the target company is critical to the success of mergers and acquisitions. Mid-level managers work closely with the team members. With the right leadership skills and adaptability, they can influence and motivate other team members to build a positive environment.

5. Maintain transparency with bad News

Transparency is essential to building trust, even if you are delivering bad news. For instance, if you decide to lay off employees after the merger, announce it the moment you take the decision. Treat the affected employees with respect and offer outplacement or other benefits. The way you treat the laid-off employees has a great impact on the morale of the remaining team members.
The way you handle the risks associated with M&A activities define the success of the deal. Hope these strategies will help you handle your M&A ambitions in the right way. If your company is considering M&A in transportation and logistics industry, get in touch with us. We provide m&a advisory for logistics companies to deliver long-term value. Call us today at 800-913-5467.
Source: https://www2.deloitte.com/content/dam/Deloitte/au/Documents/mergers-acqisitions/deloitte-au-ma-2015-trends-240415.pdf

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