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Small gains, big wins

Disruptive M&A: Creating value through innovation-led acquisitions

As the pace of innovation continues to accelerate, disruptive mergers and acquisitions (M&A) is key to corporate growth strategy. But how should leaders approach these deals to maximize M&A value creation? Our report takes a closer look at three stages of the disruptive M&A lifecycle and explores an M&A integration approach designed to assimilate new business models.

Disruptive innovation drives new deals

Today’s business leaders are charged with the twin objectives of responding to the threats of disruption, while simultaneously harnessing these very forces to create new “businesses of tomorrow.” Companies that don’t embrace this mind-set may risk being undermined. Enter disruptive M&A.

Disruptive M&A includes partnerships, joint ventures, buy-outs, and corporate ventures that help companies quickly unlock innovation-led growth and transform their businesses. Deloitte analysis shows companies spent about $880 billion on M&A deal activity between 2015 and 2018 to acquire disruptive technologies and invested $220 billion through corporate venture capital units.

In addition to financial returns, these transactions offer access to the technologies, talent, and operating models that can differentiate tomorrow’s leaders from tomorrow’s afterthoughts. The deal rationale is often driven by the promise of revenue synergies, which are much harder to capture than cost synergies.

As a result, disruptive M&A value creation is inherently complex. Selecting the right opportunities requires evaluating and assessing a much broader range of possibilities and targets than traditional M&A. These deals also require a strategic rethink at every stage of the process, from deal origination in a fast-evolving ecosystem, to due diligence on emerging technologies, to well-planned M&A integration.

Our report examines three stages of the disruptive M&A lifecycle:

  1. Unlocking new sources of innovation-led growth
  2. Identifying and executing the right deal
  3. Creating value and delivering the expected returns

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