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?
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.
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.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.