Making successful acquisitions

Posted on: May 25th, 2016 by Staffan Engstrom

I love making acquisitions. There is the thrill of the chase, critical decision conference calls, fast-track due diligence, and adrenalin-pumping late night negotiations.

But after the late night deal comes the cold light of day… with the longer-term consequences.

I have seen many deals from the cradle of their inception to the completion of integration. In my experience, the good ones have outweighed the bad ones by a distance, but some of the bad have been awful, and even in the best there is always scope to do better. So I took half a dozen of the most interesting deals that I have done, ranked them in terms of their overall success, and compared the rankings with how well (in my view) various aspects were delivered. See the attached paper for some interesting reading…

The conclusion? The strongest factors for success in acquisitions are not actually about the due diligence, or the hours spent poring over the contract in lawyers’ offices (as important as these activities are). No, the strongest factors for success are in the strength of the upfront rationale for the deal, and in the self-discipline of only acquiring businesses that you basically know how to manage.

What kinds of deals should you be considering?