How does M&A support client growth agendas?
Mergers and acquisitions have long been used by clients as a powerful tool to achieve some of their growth aspirations, be it entering into new markets, acquiring new customers or new products. The mergers and acquisitions process, when done well, can actually be a very powerful tool.
How does M&A delivery strong shareholder returns?
When delivered effectively, M&A transactions can be a powerful tool to deliver shareholder value. Success however is not guaranteed, and research regularly finds that almost two thirds of all deals executed do not deliver the anticipated benefits that were there at the outset.
How did we arrive at this roadmap for success?
KPMG held a series of roundtables with a number of clients, and those clients range from private equity players, public companies and private companies. During those sessions with those clients, we tried to identify the key attributes of what made a successful deal and also some of the pitfalls that people can avoid. On the back of that, we have pulled together this piece of thought leadership that’s identified eight critical steps:
Step 1 is in terms of having a clearly defined strategic rationale, a vision of success, the reason why you are doing this deal.
Step 2 is around the process of how you engage targets, right from the identification of targets to the actual first interactions with those targets, which sends an important message for the rest of the transaction.
Step 3 is around structuring: structuring to protect the value and to maximise your chance of delivering benefits. That structuring can take the form of tax structuring, both from an acquirer’s point of view and the vendor’s point of view; financing, make sure you have the right debt and capital structures; and also the contract itself.
Step 4 is around having a robust view on synergies. And those robust views cannot be held by just the deal team itself, it’s important to have the operational team involved, those people who are responsible for actually delivering.
Step 5 is around the due diligence process, and we don’t just mean due diligence from a financial and tax point of view: due diligence is much broader than that and should take into account commercial and operational considerations as well.
Step 6 is a very important step: it’s around people and culture. And those clients that pay adequate attention to people and culture greatly enhance their chances of a successful outcome from a transaction.
Step 7 is around the process of integration and value creation, and planning needs to start very early in the transaction itself, and it’s a powerful tool to ensure transfer of knowledge between the deal team and the operational team.
Step 8 is around benefits tracking, and what gets measured tends to get done, so it’s an important to have a clear dashboard of what you’re striving for and to be able to measure your progress against that.
We developed this paper as our observations we that some clients were particularly good at one part of the transaction but not necessarily the whole process from start to finish. And by pulling together this piece of thought leadership we have tried to identify each of the critical steps and to broaden the conversation with our clients to make sure they are thinking end to end throughout the M&A process.