Why M&A?

Ever since I managed my first post transaction integration project, I fell in love with the subject of Mergers and Acquisitions. 

Lucky for me, transactions are on the rise again as economic conditions improve - inflation has slowed and interest rates have stabilised. 

That demand is now being unleashed and according to PWC, transactions involving a UK-based target is already 84% higher that during the same period in 2023. The main source for transactions in 2023 came from Private Equity, with 55% of transactions by volume (CityAM). This trend will not slow, since PE houses built up quite a cushion of funds while the markets were more volatile.

Growing your business through M&A activity is exciting and high pressure. The negotiations, drafting of contracts and race to completion date consume enormous amounts of time and focus.

There is rarely time to consider the range of risks involved in bringing two entities together. Many firms rely on the due diligence process to access financial or legal data and ignore many other red flags.

But the risks are real and if they materialise, they will significantly undermine the synergies outlined in the business case.
Some of the risks are obvious - what if the expected revenue isn’t there? How can we accommodate the new team(s) in our office space?

Unfortunately other risks are less obvious - have you considered client or employee flight risks, TUPE requirements, T&C disparities such as different bonus structures or employee benefits? What about unrealistic TSA durations?

When senior management is examining its M&A pipeline and considering the synergies of the different deals on the table, they are likely not considering how they will measure success post completion. Many organisations are surprisingly relaxed about holding execs to account after a deal has gone through.

Project and programme terminology differs from M&A vocabulary, therefore instead of synergies we refer to benefits.

 The monthly tracking of benefits realised is imperative. Stakeholders such as Group Finance and the owners (PE) will want to see evidence of the synergies stated in the original business case.

My playbook approach to monthly group reporting performed very well under Group scrutiny because it tracks and articulates financial and non-financial benefits as they arise and cross-references them back to the business case.

The first client I produced this for received the Group’s first ever Green status from Internal Audit. 

I can offer a range of services in this area. Starting from light touch advisory on the risks through to implementation of an integration project.

I am a founder member of March Women, a professional networking group specifically for women engaged in M&A transactions - lawyers, tax, Private Equity, advisory.