Wednesday, 30 May 2018

Five Cases how Succesful Transactions are Created

Many studies indicate that even as high percentage as 70-90% of the M&A deals fail and often there are human elements behind. But given the percentage is as high as this one it is interesting to evaluate the opposite, when acquisitions actually create additional value?

Typical ways of value-creation include for example:

1. excess capacity removal from the market;
2. talent acquisition creating costs-saving;
3. tech or IP acquisition creating cost-savings (if compared to, e.g., in-house development expenditure, licensing also worth considering);
4. performance improvement or exploitation of industry scalability; and
5. successful selection of early-stage high-growth companies.

In the current economic environment where there are political risks, global economy is suffering turbulence, interest rates are low but valuations are high, some of the above "success types" are even more difficult to execute (depending naturally on the buyer's strategy).

Based on our experience from the past deals, in particular from tech & digitalisation -driven exercises, also different kind of legal insight and business acumen is required so that legal would contribute to this value-creation process in the optimal way!

As an example, in one of the exercises involving outsourcing of a tech team of very high-profile experts, we involved the personnel to the deal-making process in an exceptional way just to ensure that these persons, although subject to divestment but who are at the same time our crown-jewels, are motivated and incentivised appropriately. The end result was successful, but needed to be carefully planned to avoid unnecessary complications (as if M&A process is not sufficiently complex on its own).

So think, how do you plan to create additional monetary gains from M&A? Should you be interested in hearing our views how we secure this and create even more, feel free to contact and we are pleased to tell more!