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- Commentary: Generating value through acquisitions
Generating value through acquisitions
HKH Management Consulting recently completed an extensive study into strategic returns generated by European SME's acquiring businesses globally. We found that, despite a common belief of M&A activity being a "holy grail" to growth, a large proportion of acquisitions seem to destroy value rather than create it. Ultimately, the single most important key to success is not the price paid or even the underlying strategy, but rather the way the merger is managed after the deal is consummated.
In this commentary, we provide an executive summary of our recent analysis covering more than 40 acquisitions completed by SME's with at least 15% of their turnover derived through DTC Business Design between 2007 and 2017, including insights into what distinguishes acquisitions that create owner value from those that destroy value.
Our research confirms that post-merger management is indeed the single most important determinant of acquisition success. Companies displaying weak post-merger management reduce their likelihood of creating value to just 30%. In contrast, companies with superior post-merger management skills significantly increase their odds of success.
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