In a typical year, there are more than 2,000 M & A transactions closed in the U.S. each year. Over time, performance has improved. In 1995, approximately 50% of M & A transactions resulted in the surviving company meeting or outperforming the industry sector index. By 2005, this figure increased to 70%.
The most common reasons for underperformance are:
Loss of Key Staff: While rationalizing operations and reducing costs (which often includes reducing staff) may be a goal, sometimes key staff can feel that they are no longer part of the long-term plans of the organization, or are simply poached by competing companies. A retention plan is essential for companies to ensure they have the right staff for the future.
Underperformance: Acquiring another company can often cause discomfort with employees, uneasiness with customers, and can result in staff losing focus on their core businesses. A strong change management plan can ensure staff will keep focused on their growth strategies.
Synergies Not Realized: Overly-aggressive estimates of cost savings and unrealistic growth plans can result in unrealistic expectations, especially in the early years post-acquisition.
Let our team help you mitigate these risks and ensure the outcome of your acquisition strategy reaches its maximum potential.