Time to invest in M&A driven growth?
23/05/08 12:00 Filed in: News commentary
CEOs may be feeling nervous about making growth related acquisitions under uncertain economic conditions. However, fortune favours the brave.
The Financial Times (www.ft.com) reported on some interesting research from the Boston Consulting Group on May 20th in an article titled “The big rewards of M&A during a downturn”
This research indicated that mergers and acquisitions carried out during an economic downturn have a higher chance of creating shareholder value than in a seemingly more favourable economic environment.
Such deals could produce long-term returns in excess of 50 per cent and, on average, create 14.5 per cent more value for shareholders of the acquirer.
Interestingly, the report found that the long-term advantage of downturn deals cannot be explained by companies simply buying low and selling high. It has more to do with acquirers in difficult situations being better at identifying targets with unrealised potential.
Unfortunately, the article was silent on how to spot such unrealised potential, but in our view at excell growth partners, some critical things to consider include:
Contact us if you need advice in any of these areas.
The Financial Times (www.ft.com) reported on some interesting research from the Boston Consulting Group on May 20th in an article titled “The big rewards of M&A during a downturn”
This research indicated that mergers and acquisitions carried out during an economic downturn have a higher chance of creating shareholder value than in a seemingly more favourable economic environment.
Such deals could produce long-term returns in excess of 50 per cent and, on average, create 14.5 per cent more value for shareholders of the acquirer.
Interestingly, the report found that the long-term advantage of downturn deals cannot be explained by companies simply buying low and selling high. It has more to do with acquirers in difficult situations being better at identifying targets with unrealised potential.
Unfortunately, the article was silent on how to spot such unrealised potential, but in our view at excell growth partners, some critical things to consider include:
- Being crystal clear on your growth strategy
- Understanding your capabilities and your gaps honestly
- Proactive scanning for M&A opportunities based on strategic fit / gaps
- Robust preliminary research and due diligence on M&A targets
Contact us if you need advice in any of these areas.