Merger and Acquisition - Is it a good idea?

09/09/2009 by Stephen Coe.

So your company has weathered the storm and thoughts are once again turning towards growth. Even though we are told the worst of the recession is over, growth is likely to remain very slow for the next 18 months. This may make CEO’s look towards M&A as a way of growing the company and satisfying their brow beaten shareholders.

Acquisitions can provide a quick fix, but at Balmoral Strategy Development we would caution against knee jerk action. M&A seldom delivers the benefits claimed when the idea is first mooted.

At Balmoral Strategy Development , we argue that M&A is merely one option to deliver a previously developed long term strategy. Opportunistic M&A is fraught with danger, often the claimed increase in market share and internal efficiency can be gained in other far less risky ways.

A mistake many make is that they focus almost exclusively on balance sheet synergies and fail to pay the necessary attention to issues surrounding company culture. Culture merging is the most difficult to achieve and we believe that it is the single most important reason that a large number of M&A’s fail to deliver. 

In summary we firmly advocate that a validated strategy must come first and that M&A is considered as one of several ways of delivering that strategy.

As usual all comments welcome - Stephen Coe, Director, Balmoral Strategy Development Limited 

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