MERGERS AND ACQUISITIONS 

The majority of organizational growth strategies contain Mergers & Acquisitions as an important segment of representing new direction.

For a corporate buyer, an acquisition involves merging one or more independently owned businesses with its own. The acquisition can be justified by economies of scale or scope - both enhancing the core business - or it may be a new platform, representing a diversification from the core business.

In any merger or acquisition, the goal is to create and capture value that more than offsets whatever price premium paid by the buyer. Sometimes, this can be achieved through financial engineering, e.g., tax benefits, using leverage, or divesting non-core assets.

However, acquirers are finding that financial engineering opportunities are decreasing and value must b created by cutting duplicative costs, transferring best practices, and taking advantage of revenue opportunities like cross-selling products.

Summit Advisors has worked on transactions for its corporate and financial buyer clients, and has been involved in all elements of the merger/acquisition value chain, from screening through to integration.

A disciplined approach to the acquisition process is vital to ensure success in a world where all studies concur that most deals destroy shareholder value. The disciplines are often ignored, thus the cost is enormous to shareholders and other stakeholders of firms involved. The disciplines are:

• Investing with direction - Acquisitions are growth strategies. Successful M & A’s have an investment policy that is based on a firm's portfolio needs and basis of competition.

• Asking the big questions - Focus on the few, big questions in due diligence that test the policy.

• Integrating where it matters - Prioritize getting at the key sources of value. Gain more by integrating less.

• Planning for contingencies –Things will go wrong. Know what you can and cannot do and prepare for the unexpected.

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