Is M&A idealistic?

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  • #56129

    Companies often go through Merger, Acquisition, and Restructuring thereafter separate. Most employees have to bear the grunt of these corporate actions. Is it an idealistic or realistic option?

    #56377
    Po Huang
    Participant

    Typically, M&A deal will include synergies such as functional optimization so some group of employees will be let go as a result. A successful company management should develop a plan for the employees who are impacted. Most global companies will find any other internal jobs for the employees or offer career training program for the terminated employees.

    #56423
    Dustin Delewski
    Participant

    I’ve seen this happen firsthand where an acquired company was sold in a matter of a few years. I do think a lot about the M&A process is idealistic compared to how complex buying a company and integrating it is. I think the deal team and the business gets wrapped up in the excitement of the deal. Early conversations between leadership of both companies are typically tinted rose-colored; they revolve around all the positives that could come out of the deal (at this point they haven’t been proven out). The people at the table for these conversations are usually higher leadership levels of the business and the corporate development team – neither of which have actually executed on an integration before, and if they have experienced an integration, they conveniently get amnesia for all the things that didn’t go according to the deal model assumptions. Once the deal picks up momentum, the excitement and urgency typically increase. A lot of times, the seller sets an unreasonable target sign date and things start to feel too rushed.
    Albeit all my cynicism, this is where having the IMO at the table early in the deal is very beneficial to use their integration experience to help the business and corp dev teams game out what could cause them to want to sell the company four years after buying it.

    #56727
    Karen Mildenhall
    Participant

    I think that hubris drives so many M&As that the market tends to correct them. Whether it’s idealism, hubris, inexperience, and the list goes on – when focus, purpose, and expertise do not align, the deal will not achieve synergies.

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