Numerous academic and accountancy studies indicate that two-thirds to three-quarters of all mergers and acquisitions destroy shareholder value - so why pursue them? Often overlooked is that the returns from a successful merger or acquisition can be phenomenal. Our experience, and other anecdotal studies, show that the key problems which lead to failed acquisitions include poor target selection, poor integration planning, lack of post-acquisition re-structuring and key staff loss in the target. These are manageable problems, but most senior executives seem to revel in 'striking a good deal' without managing the pre-deal or post-deal activity essential to making it work out. Z/Yen helps clients minimise the risks and enhance the rewards from merger and acquisition activities.
Z/Yen works with organisations through the various phases of a merger or acquisition: ¨ strategic phase: where are we now? where are we going? how are we going to get there? why do we seek a merger or acquisition? how will we manage the acquisition process? ¨ targeting phase: what markets are of interest? what are our selection criteria? how do we find these organisations? how do we best approach them? ¨ pre-deal evaluation: market due diligence; technology due diligence, management due diligence, working with financial due diligence providers, preparing integration plans; ¨ negotiation: working alongside the management team and other advisors to help achieve a deal which realises the importance of increasing sustainable value to all relevant parties; ¨ post-acquisition/merger implementation: realising the value of the acquisition/merger by developing synergies in sales, marketing, operations, intellectual property, research, distribution and other operational areas.
Each assignment is unique, but to provide a flavour some examples of Z/Yen's work include:
working with a large outsourcing company, we helped refine their acquisition strategy, leading to a focus on contract management suppliers. We then helped them to identify potential partners which resulted in an approach to a £22 million company. Ultimately, following a successful acquisition, they were able to onward-sell the acquisition in 18 months for a several-fold increase;
for a large facilities management company, we helped analyse competitors with an eye to acquisitions. This study identified a dearth of acquisition targets and a focus on organic growth which led to them selling out to one of the analysed competitors;
for an industrial distribution company with an acquisition which was going awry, we worked with the management team to identify and solve the problems brought up by the takeover. Our analysis identified a range of problems, including fraud, which we helped our client solve. Due to our work, the re-structured company went on to become the cornerstone of the group;
for a software company seeking to expand through acquisition, we worked not only on potential targets, but also on selling the acquisition strategy to their key financial backers. The end strategy led to a categorisation of potential acquisitions, identification of potential targets, technology due diligence by Z/Yen and the successful negotiation and integration of a services company which bolstered their overseas operations.
Divestment or disposal can be equally important. Z/Yen has helped companies to find potential buyers of products, sub-units and other portions of companies, as well as to seek new homes for entire companies where the shareholders wish to realise all or part of their investment. In all cases, Z/Yen's risk/reward methodology forms an excellent base from which to analyse the opportunities and risks in acquisition or sale.