After the best annual start in a decade, 2011 is being touted as the year of an M&A boom, as it begins to regain some of its pre
recession momentum.
However, with an estimated 50 – 80 % of mergers failing in the past, M&A expert Paul J Siegenthaler is urging
companies to err on the side of caution when approaching a deal, even when conditions begin to improve.
Although global M&A may
not be up to pre recession levels, it is evident that the volume of deals began to pick up throughout last year. There was a notable
absence of so called “mega deals” due to a heightened perception of risk and the element of uncertainty, something which M&A expert
Paul J. Siegenthaler predicts is likely to change this year.
He said: “2011 is shaping up to be a stronger year in terms of M&A
activity, as market uncertainty subsides and companies get a clearer and more stable picture of the business case underlying their
merger or acquisition projects. There is likely to be a rise in ‘mega deals’ this year and with this comes a greater level of risk,
if the M&A business integration process is not handled appropriately.”
For well over a decade Siegenthaler has helped numerous
acquired or merging companies to successfully integrate, and he’s seen time and time again that the most critical factors in the failure
of a merger are a lack of a clearly communicated common vision, poor planning and unrealistic resourcing, poor programme management,
inadequate stakeholder management, and poor governance.
He is concerned that many will embark on ambitious mergers or acquisitions
during 2011 which seem too good to miss out on, but will fail to realise just how challenging and complex it can be to blend to businesses
and cultures together until it’s too late.
Siegenthaler explains: “Every company embarking on an acquisition or merger assumes it will
succeed, when in fact it should assume it will fail unless it engages in a number of specific activities to avoid the many traps into
which all the failed mergers have fallen, time and time again. It is fantastic to see the current surge of confidence, but it is imperative
not to become overconfident at such a critical economic time.
Prior planning and preparation are key to ensuring any M&A has the
best chance of success, but this doesn’t mean the process should be dragged out any longer than it needs to be. This is most certainly
a time for less haste, more speed,” adds Siegenthaler.