M&As: four questions to ask before the proposal

Abstract

Purpose

According to the Irish writer, Oscar Wilde, a second marriage is the “triumph of hope over experience”. Many mergers and acquisitions (M&As) could be cast in the same light. This paper aims to outline four crucial questions senior managers should ask before embarking on a merger or acquisition.

Design/methodology/approach

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Findings

Repeated studies have found that more than 50 per cent of M&As destroy rather than create value. Companies wishing to embark upon a merger or acquisition should thus think carefully before signing and ensure that they have made an impartial and critical analysis of the price, financing of the deal, complementarity and the cultural differences between the two organisations. If senior managers did this systematically before popping the question, the business world would certainly see less heartbreak.

Practical implications

The paper provides strategic insights and practical thinking that have influenced some of the world’s leading organisations.

Originality/value

The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Citation

Studer, P. and Thomas, M. (2016), "M&As: four questions to ask before the proposal", Strategic Direction, Vol. 32 No. 6, pp. 15-18. https://doi.org/10.1108/SD-03-2016-0033