Should opportunistic M&A transactions only be considered if they meet criteria?

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  • #36315
    Sara Jane Knox
    Participant

    If an organisation has a M&A strategy, clear acquisition criteria and a pipeline, then what should it do when an opportunistic acquisition arises which falls outside its criteria? Is it worth exploring to see if stress tests the acquisition criteria or is it just an unwelcome distraction from execution of a strategy?

    #38945
    Yuin Harng Ng
    Participant

    If there is a pre-determined acquisition criteria and a potential acquisition that falls outside the criteria, it’s important to not change the underlying assumptions or factors in order to do a deal, for the sake for doing a deal.

    Opportunities are everywhere, there’s no need to spend resources into ascertaining deals that falls out of the pre-determined criteria and it would be easier to execute well filtered deals which have higher probability of success and generate net value for the company; it’s not a surprise that 83% of M&A are non-accretive and the clear acquisition criteria is there to safeguard organisational interest.

    #38955
    Elizabeth Perlak
    Participant

    It seems to be a very strict position to not consider a deal simply because it does not meet current criteria if there is a potential benefit identified in that unexpected opportunity. I think you would want to consider the pros and cons of stepping outside of your criteria and if that deal has enough value to make an exception. I think factors like distraction from current plan, resources occupied should all be evaluated but I think you will also want to have enough flexibility to pivot to a potential beneficial deal that arises.

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