Investing to grow

Acquisition of promising companies

Maximum deal value

Organic growth is the common form of growth for many companies. But if you have a surplus of cash and a healthy balance sheet, acquiring a promising company can be the best option for growth. Are you considering an acquisition? Ask yourself some key questions:

Why are you thinking about acquiring this particular company?
How does this acquisition fit into your overall growth strategy?
What risks do you foresee with the takeover?
How do you get your maximum deal value?

Focus on long-term value

Through strategic reorientation, digital transformation and a greater focus on human potential, companies are increasingly focusing on long-term value creation. Mergers and acquisitions are an important tool to accelerate value creation, provided you start thinking about value in a more holistic way.

A more holistic view also focuses on the potential of acquisitions outside your own industry. A non-industry specific transaction is often (for established companies) the quickest way to respond to changing market conditions. Organically building new specific capabilities, business models or customer bases usually takes more time.

So keep a close eye on what is happening in your own and neighboring markets. Find out which new business models are emerging and which newcomers are entering the market. And analyze which so-called 'capabilities' you have yourself, which you lack and how you would like to build them up for further value creation. Because even more than with a focus on the figures, you increase the chance of value creation with the right 'capabilities fit'.

Tackle specific risks: people and culture

Companies that invest to grow are often large(r) companies that take over small(er), entrepreneurial companies. These small businesses often have clearly formulated goals and values that are understood and felt by their employees, the so-called company culture. In an acquisition, this culture – which nurtures creative energy and talent – can be lost or weakened. Which in turn can have an impact on retaining and attracting employees with the right skills and talents. So ensure an intelligent cultural integration in order not to lose value.

Capabilities are more important than ever for the success of a takeover. If there is a good match between the buyer and the party to be acquired in terms of people skills, corporate culture, available technology and processes ('capabilities fit'), you increase the chance of more value creation.

Five steps for maximum deal value

An acquisition mainly creates value if the unique business characteristics ('capabilities') of both parties reinforce each other. With the following five steps you can maximise the value of your deals:

Determine the current unique characteristics ('capabilities') of your company and which ones you need to remain valuable to your stakeholders. Where are the gaps in your organisation? Knowing that, you can determine how to fill the gaps: develop yourself or through a merger or acquisition.
Perform ongoing portfolio optimisations, viewing your portfolio from a capabilities perspective. Do your business units still fit together? Are there parts that you can better dispose of?
Always be ready to take over a game. Build on the insights from the first two steps to ensure an effective acquisition policy.
Build distinctive insight and capability for M&A integration, because every deal requires a different approach.
Be decisive and act quickly. Does a business unit not fit the desired business characteristics? Then quickly distance yourself from it instead of changing it and losing value. The same applies the other way around: if there is a gap in your portfolio, you must act immediately to fill it. Otherwise, you will lag behind your competitors.