Shopping spree. Businesses spent $1.74 trillion on M&A involving US companies during the first six months of this year—the highest amount in more than four decades and nearly 36% more than in the first six months of 2019. Near-zero interest rates, monetary stimulus, and investor demand for corporate debt are adding to companies’ financial fuel. [WSJ]
Splurging on tech. The tech industry experienced an unprecedented frenzy of deals worth more than $671 billion—accounting for nearly a quarter of all M&A in the first half of 2021. Much of the growth is attributable to trends that started before the COVID-19-pandemic, including consolidation, private equity buying up companies, and the rise of special-purpose acquisition companies (SPACS). [Quartz]
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Companies often lack the organization needed to execute M&A successfully
Why it matters. Best M&A practices are well known, but many companies fail to implement them. According to our research, high-performing companies are significantly more likely than low-performing ones to report that they have the necessary skills and capacity to support essential pre-deal activities. Among them: deal screening. Companies that seek five to 15 deals a year may need to start out by screening as many as 150.
Spend wisely. Companies should first understand what kind of M&A strategy they’re pursuing: Is it a transformational deal? Or are they acquiring an adjacent business or a geographic tuck-in? Then they need to determine who will lead—a specialized M&A unit? Corporate or business-unit leadership? Answering these and other strategy questions will help develop the muscle needed to execute successful M&A.
— Edited by Katy McLaughlin
| Merge well |
