Virtual Data Room Blog

Acquisition Rationale (What creates value in acquisitions)

04-Oct-2010 03:00:36 / by Francisco Lorca posted in M&A News, M&A, Corporate Finance, virtual data room, dataroom, Uncategorized, McKinsey


According to a very interesting McKinsey Quarterly article, acquisitions are in general successful if they follow one of these objectives:

    • Improve the target company’s performance

    • Consolidate to remove excess capacity from industry

    • Accelerate market access for the target’s (or buyer’s) products

    • Get skills or technologies faster or at lower cost than they can be built

    • Pick winners early and help them develop their businesses

There are other factors that are normally used as part of a "deal rationale" such as "We are Buying Cheap", "This is a transformation deal", "This is a key part of our roll-up strategy".  The research shows that those reasons rarely create value. 
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