Virtual Data Room Blog

Acquisition Rationale (What creates value in acquisitions)

Oct 4, 2010 3:00:36 AM / by Francisco Lorca posted in M&A News, M&A, dataroom, virtual data room, Corporate Finance, 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

Other factors that are normally used as part of a "deal rationale" are shown to create value relatively rarely (Buy cheap, Enter into a transformational merger, Roll-Up strategy).
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