An M&A Culture Due Diligence Solution: It’s not just the wedding, it’s the marriage

Hearts and Minds - The Key to Successful Mergers

The merger and acquisition (M&A) boom of the last few years shows few signs of easing up. Most acquirers have the wherewithal to continue making deals and paying fat premiums. The implication however is clear: the executives doing the deals are bullish that they can realize synergistic value.”

Many observers and many independent studies question whether M&A’s truely add value. Executives also point to the unfulfilled realisation of synergies. Only half of the senior executives polled in a 2006 Intelligence Unit survey believed that their companies had achieved the revenue synergies they had expected from their M&A activities, and just 45% affirmed that expected cost synergies had been captured.

Although acquirers are getting better at identifying and capturing synergies, many deals still do not recover their acquisition premiums and others fail to achieve the long list of benefits touted by management as the rationales for doing the deals in the first place. Some of these failures are clearly the result of overpaying for targets, but others are due to an incorrect understanding of what exactly synergies are, and how they should be captured. There are several factors that are easy to overlook, or under-appreciate when deal-making and emotions run high...

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