Dedicated in-house M&A team

This topic contains 1 reply, has 2 voices, and was last updated by  Michael Maggiotto Jr 2 weeks, 2 days ago.

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  • #122903

    How common is it for a business to have a dedicated in-house M&A team? From experience, most businesses will not have a dedicated team; instead, as and when the business is involved in M&A activity, in-house experts from Finance, Law, HR etc. will be asked to get involved and there will be a heavy reliance on advisers.

    Do businesses that frequently undertake M&A transactions have a dedicated and focused in-house team to research potential acquisitions, pursue a target and conclude a deal?

    #122911

    Yes – you are correct in that most businesses do not have a dedicated M&A team. Most businesses are small to mid-sized businesses. Take the US, for example, where nearly 90% of all businesses are classified as small to mid-sized and somewhere around 70% (have to check the latest data for more specifics) are 100 or fewer employees. That said, large businesses (approximately 10% of all businesses in the US) employ nearly 60% of the US population.

    What this means is that small and mid-sized businesses tend not to be able to afford a dedicated team for M&A and thus are highly reliant on outside advisors for support and guidance through the process. The large businesses that are more focused on organic growth than acquisition growth also tend not to have a dedicated team for M&A. Only the large companies that grow by both organic and acquisition or are focused in large part on acquisition growth tend to have dedicated M&A teams.

    On such teams, there are usually specialists who are tasked with market research to identify potential acquisitions. I know several professionals who have worked with companies from Xerox to IBM, in the entertainment and CPG space such as P&G, J&J, Unilever, and Newell Brands. While these businesses have dedicated teams, they are rarely if ever discipline diverse. In other words, the professionals are typically finance of FP&A focused backgrounds rather than HR, Operations, Marketing, etc. focused. While the other functional areas of a business will be tapped to support their specific need at a particular point in the transaction, they are rarely permanent members of the team. For a while, Roche Diagnostics did have a few HR Executives who were permanent leaders on the M&A Teams, and they had a very well documented Human Capital Due Diligence process at the ready, but I am not sure if they have retained this model to this day. They were the exception to the rule, in my limited observation.

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