Many of the world’s largest and most successful businesses have been built by mergers and acquisitions. From Sinopec to Facebook, Pfizer to Mizuho, Time Warner to Unilever, M&A has been a crucial contributor to the success of each business. But of course the reverse is also true – some of the world’s largest and most disastrous corporate failures have been brought about by ill-conceived, ill-timed, or poorly executed transactions.
Chroniclers are fond of reminding us that history repeats itself. This seems as true in the corporate world as anywhere else, no doubt because many of the lessons of recent events are so often ignored.
With the world economy already a decade into the low growth era, boards and executive teams are under more pressure than ever to buy their way out of the financial doldrums. Meanwhile the cost of debt is at 5000 year lows, and equity markets are not far from all time highs, making both transformational and catastrophic acquisitions easier than ever to finance. With these exceptionally difficult choices in mind, we’ve looked back over the last thirty years of M&A to identify the root causes of the more epic disasters. These are the Seven Deadly Sins of M&A: the warning signs that boards, CEOs and advisors can and must look out for in the year ahead. Read on...
‘It’s smaller than I thought’ -- a common phrase overheard in the presence of Da Vinci’s Mona Lisa hanging in the Louvre museum in Paris. A wildly undeserving observation, however, when thinking about the impact of the painting and its meticulous execution. Likewise with successful joint ventures.
Joint ventures can be an efficient way to add scale, avoid the risk of an outright acquisition, enter new markets and create new business relationships. But they also bring huge risks and uncertainties when undertaken in the dark. If would-be partners don’t think through strategy and execution carefully in advance, they are more likely to destroy value rather than create it. Small partnerships can create disproportionately large and painful problems, whilst large ones frequently fail to create much value at all. Happily, art provides a compelling framework for bringing light and clarity to the creation of joint ventures, as we explore below. Read on...