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Growth through merger and acquisitions
Promise and reality
M&A transactions almost always offer viable opportunities to achieve cost synergies and drive efficiency.
But growth- oriented companies should not allow themselves to become trapped by a short- term focus and simply attempt to save their way to the deal success target.
It isn’t unusual for a company pursuing a merger or acquisition to express high hopes that the deal will be a growth engine. The intention, quite reasonably, is that the resulting combination of products, people and pipelines will take the business to new heights.
Then reality sets in. The combined business has to deal with a presence in multiple markets, a larger and more diverse customer base, a more complex product and services portfolio, and a high level of people and operational complexity. Cost synergies, a tangible and often quickly attainable goal, take precedence over the grinding work of formulating, isolating and tracking revenue metrics and growth efforts. Cost reduction goals can even conflict with revenue growth opportunities.
Little wonder then that a majority of M&A deals intended specifically to enable growth fail to achieve their expressed growth objective. While M&A can be a road to growth, the decision to make the deal is only the first of many decisions that will affect its outcome. What can acquisition-oriented businesses do—especially those pursuing transactions with strategic growth as a goal—to increase their chances of success?
Success in growth-oriented M&A hinges on taking a disciplined approach based on a real understanding of the actions and initiatives required to drive short- and long-term value. By addressing the eight priorities outlined in this report, both early in the deal process and throughout the integration, companies can emerge as high performers that capture the expected value of their growth opportunities.