Why M&A Marriages Fail

Posted by Rock LaManna

M&A Marriage - Rock Lamanna - LaManna Alliance PodcastFor owners in the print and print related industries, if you think of an M&A deal like a marriage, then it's much more likely it will be successful. We're talking about demonstrating values like trust and integrity.

On the other hand, relationships that are based on greed, usually don't end very well. And yet, that's how many treat mergers and acquisitions.

It's too bad because an M&A deal offers a tremendous way for you to accelerate the growth of your company.

I’ve been actively involved with M&A transactions for 35 years. I’ve seen and completed hundreds of deals, from small business liquidations to multi-billion dollar growth projects. 

But watch out: There are winners and losers in these relationships. The winners play well with others and focus on a transaction. ALL parties benefit.

The losers usually are greedy, which kills the deal.  

Doomed to Fail?

According to the Harvard Business Review, “Study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%.”

There are a number of reasons why these deals go south, including:

  1. Wrong strategic fit
  2. Poor price structure
  3. Cultures don’t align
  4. Poor communication

When Greed Takes Over

For the buyer and the seller, this means ignoring reality and demanding too high or too low a price. And there's too much focus on cash.

They want to close the deal, even when the situation isn’t right. Sometimes, the seller has already spent the money in his or her head, enjoying a carefree retirement of sunsets and cocktails.

This daydreaming takes the focus off running the business. Then profits sink and the asking price becomes laughable.

Instead, you need to build your revenue and profits during the sale. It will keep your price steady, and reassure your investor that you and your company are committed to the future. 

You’ll enjoy a smoother transition if your sales are climbing and your systems are operating effectively.

If You Worry About Who Wins, Then You Lose

The right M&A strategy can produce impressive growth. But if you're focus is just on your wallet, then your dream can become a nightmare.

Too many people focus on just the short-term cash.  Think of the money more in terms of success and fulfillment, and less in terms of buying something with it.

Find trustworthy, skilled advisors to help you develop a strategy, execute your plan, and invest the resources it takes to get the job done right.

Ultimately, this is a team game. It’s also extremely competitive. For an M&A combination to succeed, the buyer, the seller and the employees who are there when the dust settles need to win.  There is no room for greed in a win-win-win situation. Make it a happy marriage for all.


Topics: mergers and acquisitions