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Mergers and Acquisitions : Marriage - Any similarity?

According to a Forbes article, 2015 could be the best year for M&A (Mergers and Acquisitions) since the financial crisis. The article mentions "According to data from Thomson Reuters analyzed by PricewaterhouseCoopers, the U.S. saw 4,654 M&A deals worth a whopping $875 billion from the start of the year through May 31. But what might be even more remarkable is that, according to the same analysis by PwC, the M&A market is just getting warmed up, and 2015′s merger market could be the best for the U.S. since the financial crisis."

Being part of the corporate world for about 15 years now, I’ve read, heard and seen several Mergers and Acquisitions (M&A) as part of my professional career; and the subject has always piqued my interest. It fascinates me to understand what underlying drivers compel two different businesses to become one!

At a broad level, I think M&A’s are somewhat like a marriage. What exactly happens in a marriage? Two individuals born at different times, in different circumstances, in different socio-economic starta, with different priorities, interests, values, motivation, life experiences, dreams come together to become one entity.

It is equally fascinating to understand why two people come together in matrimony? I’ve seen, heard, read and observed that the reasons can be plenty – from physical needs, to emotional drivers (from love to fear to insecurity to the quest for happiness) , to social pressures, to intellectual synergies, to financial necessities, to business interests. In many cases, it is a combination of the above factors which bring together two people to matrimony.

Similarly, in the case of M&A’s – below are some of the rationale that I have seen  for what drives M&A’s among different companies.

  1. To acquire (new) customers
  2. To retain (existing) customers
  3. To enter a new geography
  4.  To take business to the next level of growth
  5.  To kill competition
  6.  To acquire a partner
  7.  To fast-track brand creation
  8.  To acquire a competitive advantage – like a product / IP, or technical competence
  9.  To become more powerful in the industry
  10.  To make money – purely financial reasons
  11.  To be No.1 in the market industry
  12.  To exit a market / business (especially relevant for startups as an exit strategy)

Coming back to my analogy of marriage, once you get married – it can happen that somewhere along the way you change. That is, you want different things from life or you realize that your partner is unable to give you what you had desired. So what are your options? – Stay put, or move on. Moving on seems to be an acceptable choice these days (unlike in the past).. After all, it is one life to live, so why "Stay Put" when you can easily move to greener pastures?..

Why should it be any different in an M&A. After all, nothing lasts forever.. Right?

Leave  a comment with your views..


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