November 2, 2022 at 8:27 am #70659Gauri GuptaParticipant
What would be the right time (e.g. in weeks/months) to assess or evaluate the success of an M&A deal and post-merger integration after closing ?November 6, 2022 at 11:29 pm #70830Ryan DawkinsParticipant
We develop multi-year valuation models to project the earnings of the deal then continue to monitor that for the life of the product. If we see those earnings change, then we investigate the forces causing the changes and correct when possible. We do establish shorter term synergistic targets that may be achieved during the integration or immediately afterwards. Part of setting those targets is establishing the expected timeline for results.November 11, 2022 at 10:30 pm #71161Martin TseParticipant
We usually have a 100 day review after ‘Post Close Integrations’ to see how far we have come, as well as measure by financial reviews and comparing to previous quarters.November 14, 2022 at 6:25 pm #71219Shunji Brown-WoodsParticipant
This is a good question. I believe that the approach to measure success will change slightly post-covid and be contingent upon timing. Success will have to be measured in intervals and with a blend of qualitative measures linked to the quantitative ones.November 23, 2022 at 1:54 pm #71456Kannuswamy VenguswamyParticipant
The ‘right time’ to assess or evaluate the ‘success’ of a M&A deal would depend on the target time frame set by the acquirer to complete the integration and reap the synergies in full. Acquirer has to set this ‘right time frame’ which is more realistic considering the magnitude and complexity of the integration job on hand and also the external factors if any that may have a bearing.
To make sure the integration is successful and the synergies are reaped in full (and thereby the M&A deal itself), every acquirer has to continue to assess the progress at the pre-determined intervals, take prompt action as deemed fit after such periodic assessments and finally ensure the whole process is completed on time and as desired without any dilution.
Hope this helps.December 1, 2022 at 11:58 am #71693Gauri GuptaParticipant
Thank you all for your insightful and valuable responses.December 2, 2022 at 4:40 pm #71751NahidaParticipant
Hi – For me you measure in multiple areas of the merger. First at the 100 day, then at 6 months and then continuously on a yearly basis for the 10 years. That is a model we have currently and when creating a business case we show the next 10 years financial roadmap where possible.December 13, 2022 at 6:01 pm #72320Tim KnaulParticipant
For me, two items would dictate the measurement period: 1) the time it takes to fully realize all synergies and 2) the timing of any significant modeled changes to the financial model (for example, if year 5 post-acquisition it is assumed that regulatory changes would drastically improve financial performance, it would be critical to evaluate the success of the acquisition after these expected changes take effect).December 14, 2022 at 12:53 pm #72339Kester LowParticipant
Typically, the first 100 days would be important and the first checkpoint for management to reconsider organisational strategy if necessary. Thereafter, the company/shareholders can set realistic checkpoints in the longer term (every 6 months/every financial year till the 5th year post-acquisition for example).December 14, 2022 at 3:29 pm #72343Hugh JonesParticipant
We typically measure success based on the pre-deal integration and value realization timelines. This provides an objective measure to manage too. Naturally, variances to occur but one can rationalize these against prior targets.
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