How to maximise value creation during the M&A process?

Article

How to maximise value creation during the M&A process?

It is commonly acknowledged that mergers and acquisitions can be effective tools in the execution of a corporate strategy seeking to maximise value for shareholders.

Executive summary

That being said, this route is not without pitfalls and careful thought must be given to the planning of both the execution and the post-deal integration phases.

The integration risks are often not fully understood or fully scoped at the time the deal is signed. Similarly, integration risks are rarely seen as a high priority at that stage.

From the point of view of the acquirer’s shareholders, a transaction can lead to value creation through three main avenues:

  • Target is acquired at a lower price than its intrinsic value
  • Improvement of the target’s operating and financial performance on a stand-alone basis post-acquisition
  • Realisation of synergies between the acquirer and the target, assuming that the value associated with these synergies is not transferred by the buyer to the seller via the transaction price

This article will focus on the third source of value creation, namely the value generated through the realisation of synergies between the two parties. 

Inside magazine issue 5 – June 2014

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics). 

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