merger and acquisition case study

Hacking the Case Interview

Merger & acquisition (M&A) cases are a common type of case you’ll see in consulting interviews. You are likely to see at least one M&A case in your upcoming interviews, especially at consulting firms that have a large M&A or private equity practice.

These cases are fairly straight forward and predictable, so once you’ve done a few cases, you’ll be able to solve any M&A case.

In this article, we’ll cover:

• Two types of merger & acquisition case interviews
• The five steps to solve any M&A case
• The perfect M&A case interview framework
• Merger & acquisition case interview examples
• Recommended M&A case interview resources

If you’re looking for a step-by-step shortcut to learn case interviews quickly, enroll in our case interview course . These insider strategies from a former Bain interviewer helped 30,000+ land consulting offers while saving hundreds of hours of prep time.

Two Types of Merger & Acquisition Case Interviews

A merger is a business transaction that unites two companies into a new and single entity. Typically, the two companies merging are roughly the same size. After the merger, the two companies are no longer separately owned and operated. They are owned by a single entity.

An acquisition is a business transaction in which one company purchases full control of another company. Following the acquisition, the company being purchased will dissolve and cease to exist. The new owner of the company will absorb all of the acquired company’s assets and liabilities.

There are two types of M&A cases you’ll see in consulting case interviews:  

A company acquiring or merging with another company

• A private equity firm acquiring a company, also called a private equity case interview

The first type of M&A case is the most common. A company is deciding whether to acquire or merge with another company.

Example: Walmart is a large retail corporation that operates a chain of supermarkets, department stores, and grocery stores. They are considering acquiring a company that provides an online platform for small businesses to sell their products. Should they make this acquisition?

There are many reasons why a company would want to acquire or merge with another company. In making an acquisition or merger, a company may be trying to:

• Gain access to the other company’s customers
• Gain access to the other company’s distribution channels
• Acquire intellectual property, proprietary technology, or other assets
• Realize cost synergies
• Acquire talent
• Remove a competitor from the market
• Diversify sources of revenue

A private equity firm acquiring a company

The second type of M&A case is a private equity firm deciding whether to acquire a company. This type of M&A case is slightly different from the first type because private equity firms don’t operate like traditional businesses.

Private equity firms are investment management companies that use investor money to acquire companies in the hopes of generating a high return on investment.

After acquiring a company, a private equity firm will try to improve the company’s operations and drive growth. After a number of years, the firm will look to sell the acquired company for a higher price than what it was originally purchased for.

Example: A private equity firm is considering acquiring a national chain of tattoo parlors. Should they make this investment?

There are a few different reasons why a private equity firm would acquire a company. By investing in a company, the private equity firm may be trying to:

• Generate a high return on investment
• Diversify its portfolio of companies to reduce risk
• Realize synergies with other companies that the firm owns

Regardless of which type of M&A case you get, they both can be solved using the same five step approach.

The Five Steps to Solve Any M&A Case Interview

Step One: Understand the reason for the acquisition

The first step to solve any M&A case is to understand the primary reason behind making the acquisition. The three most common reasons are:

• The company wants to generate a high return on investment
• The company wants to acquire intellectual property, proprietary technology, or other assets
• The company wants to realize revenue or cost synergies

Knowing the reason for the acquisition is necessary to have the context to properly assess whether the acquisition should be made.

Step Two: Quantify the specific goal or target

When you understand the reason for the acquisition, identify what the specific goal or target is. Try to use numbers to quantify the metric for success.

For example, if the company wants a high return on investment, what ROI are they targeting? If the company wants to realize revenue synergies, how much of a revenue increase are they expecting?

Depending on the case, some goals or targets may not be quantifiable. For example, if the company is looking to diversify its revenue sources, this is not easily quantifiable.

Step Three: Create a M&A framework and work through the case

With the specific goal or target in mind, structure a framework to help guide you through the case. Your framework should include all of the important areas or questions you need to explore in order to determine whether the company should make the acquisition.

We’ll cover the perfect M&A framework in the next section of the article, but to summarize, there are four major areas in your framework:

Market attractiveness : Is the market that the acquisition target plays in attractive?

Company attractiveness : Is the acquisition target an attractive company?

Synergies : Are there significant revenue and cost synergies that can be realized?

Financial implications : What are the expected financial gains or return on investment from this acquisition?

Step Four: Consider risks OR consider alternative acquisition targets

Your M&A case framework will help you investigate the right things to develop a hypothesis for whether or not the company should make the acquisition.

The next step in completing an M&A case depends on whether you are leaning towards recommending making the acquisition or recommending not making the acquisition.

If you are leaning towards recommending making the acquisition…

Explore the potential risks of the acquisition.

How will the acquisition affect existing customers? Will it be difficult to integrate the two companies? How will competitors react to this acquisition?

If there are significant risks, this may change the recommendation that you have.

If you are leaning towards NOT recommending making the acquisition…

Consider other potential acquisition targets.

Remember that there is always an opportunity cost when a company makes an acquisition. The money spent on making the acquisition could be spent on something else.

Is there another acquisition target that the company should pursue instead? Are there other projects or investments that are better to pursue? These ideas can be included as next steps in your recommendation.

Step Five: Deliver a recommendation and propose next steps

At this point, you will have explored all of the important areas and answered all of the major questions needed to solve the case. Now it is time to put together all of the work that you have done into a recommendation.

Structure your recommendation in the following way so that it is clear and concise:

• State your overall recommendation firmly
• Provide three reasons that support your recommendation
• Propose potential next steps to explore

The Perfect M&A Case Interview Framework

The perfect M&A case framework breaks down the complex question of whether or not the company should make the acquisition into smaller and more manageable questions.

You should always aspire to create a tailored framework that is specific to the case that you are solving. Do not rely on using memorized frameworks because they do not always work given the specific context provided.

For merger and acquisition cases, there are four major areas that are the most important.

1. Market attractiveness

For this area of your framework, the overall question you are trying to answer is whether the market that the acquisition target plays in is attractive. There are a number of different factors to consider when assessing the market attractiveness:  

• What is the market size?
• What is the market growth rate?
• What are average profit margins in the market?
• How available and strong are substitutes?
• How strong is supplier power?
• How strong is buyer power?
• How high are barriers to entry?

2. Company attractiveness

For this area of your framework, the overall question you want to answer is whether the acquisition target is an attractive company. To assess this, you can look at the following questions:

• Is the company profitable?
• How quickly is the company growing?
• Does the company have any competitive advantages?
• Does the company have significant differentiation from competitors?

3. Synergies

For this area of your framework, the overall question you are trying to answer is whether there are significant synergies that can be realized from the acquisition.

There are two types of synergies:

• Revenue synergies
• Cost synergies

Revenue synergies help the company increase revenues. Examples of revenue synergies include accessing new distribution channels, accessing new customer segments, cross-selling products, up-selling products, and bundling products together.

Cost synergies help the company reduce overall costs. Examples of cost synergies include consolidating redundant costs and having increased buyer power.

4. Financial implications

For this area of your framework, the main question you are trying to answer is whether the expected financial gains or return on investment justifies the acquisition price.

To do this, you may need to answer the following questions:  

• Is the acquisition price fair?
• How long will it take to break even on the acquisition price?
• What is the expected increase in annual revenue?
• What are the expected cost savings?
• What is the projected return on investment?

Merger & Acquisition Case Interview Examples

Let’s put our strategy and framework for M&A cases into practice by going through an example.

M&A case example: Your client is the second largest fast food restaurant chain in the United States, specializing in serving burgers and fries. As part of their growth strategy, they are considering acquiring Chicken Express, a fast food chain that specializes in serving chicken sandwiches. You have been hired to advise on whether this acquisition should be made.

To solve this case, we’ll go through the five steps we outlined above.

The case mentions that the acquisition is part of the client’s growth strategy. However, it is unclear what kind of growth the client is pursuing.

Are they looking to grow revenues? Are they looking to grow profits? Are they looking to grow their number of locations? We need to ask a clarifying question to the interviewer to understand the reason behind the potential acquisition.

Question: Why is our client looking to make an acquisition? Are they trying to grow revenues, profits, or something else? 

Answer: The client is looking to grow profits.

Now that we understand why the client is considering acquiring Chicken Express, we need to quantify what the specific goal or target is. Is there a particular profit number that the client is trying to reach?

We’ll need to ask the interviewer another question to identify this.

Question: Is there a specific profit figure that the client is trying to reach within a specified time period?

Answer: The client is trying to increase annual profits by at least $200M by the end of the first year following the acquisition.

With this specific goal in mind, we need to structure a framework to identify all of the important and relevant areas and questions to explore. We can use market attractiveness, company attractiveness, synergies, and financial implications as the four broad areas of our framework.

We’ll need to identify and select the most important questions to answer in each of these areas. One potential framework could look like the following:

Let’s fast forward through this case and say that you have identified the following key takeaways from exploring the various areas in your framework:

• Chicken Express has been growing at 8% per year over the past five years while the fast food industry has been growing at 3% per year
• Among fast food chains, Chicken Express has the highest customer satisfaction score
• Revenue synergies would increase annual profit by $175M. This is driven by leveraging the Chicken Express brand name to increase traffic to existing locations
• Cost synergies would decrease annual costs by $50M due to increased buyer power following the acquisition

At this point, we are leaning towards recommending that our client acquire Chicken Express. To strengthen our hypothesis, we need to explore the potential risks of the acquisition.

Can the two companies be integrated smoothly? Is there a risk of sales cannibalization between the two fast food chains? How will competitors react to this acquisition?

For this case, let’s say that we have investigated these risks and have concluded that none of them pose a significant threat to achieving the client’s goals of increasing annual profit by $200M.

We’ll now synthesize the work we have done so far and provide a clear and concise recommendation. One potential recommendation may look like the following:

I recommend that our client acquires Chicken Express. There are three reasons that support this.

One, Chicken Express is an attractive acquisition target. They are growing significantly faster than the fast food industry average and have the highest customer satisfaction scores among fast food chains.

Two, revenue synergies would increase annual profit by $175M. The client can leverage the brand name of Chicken Express to drive an increase in traffic to existing locations.

Three, cost synergies would decrease annual costs by $50M. This is due to an increase in buyer power following the acquisition.

Therefore, our client will be able to achieve its goal of increasing annual profits by at least $200M. For next steps, I’d like to assess the acquisition price to determine whether it is reasonable and fair.

More M&A case interview practice

Follow along with the video below for another merger and acquisition case interview example.

For more practice, check out our article on 23 MBA consulting casebooks with 700+ free practice cases .

In addition to M&A case interviews, we also have additional step-by-step guides to: profitability case interviews , market entry case interviews , growth strategy case interviews , pricing case interviews , operations case interviews , and marketing case interviews .

Recommended M&A Case Interview Resources

Here are the resources we recommend to learn the most robust, effective case interview strategies in the least time-consuming way:

• Comprehensive Case Interview Course (our #1 recommendation): The only resource you need. Whether you have no business background, rusty math skills, or are short on time, this step-by-step course will transform you into a top 1% caser that lands multiple consulting offers.
• Hacking the Case Interview Book   (available on Amazon): Perfect for beginners that are short on time. Transform yourself from a stressed-out case interview newbie to a confident intermediate in under a week. Some readers finish this book in a day and can already tackle tough cases.
• The Ultimate Case Interview Workbook (available on Amazon): Perfect for intermediates struggling with frameworks, case math, or generating business insights. No need to find a case partner – these drills, practice problems, and full-length cases can all be done by yourself.
• Case Interview Coaching : Personalized, one-on-one coaching with former consulting interviewers
• Behavioral & Fit Interview Course : Be prepared for 98% of behavioral and fit questions in just a few hours. We'll teach you exactly how to draft answers that will impress your interviewer
• Resume Review & Editing : Transform your resume into one that will get you multiple interviews

Land Multiple Consulting Offers

Complete, step-by-step case interview course. 30,000+ happy customers.

A blueprint for M&A success

Large mergers and acquisitions (M&A) tend to get the biggest headlines, but, as McKinsey research  indicates, executives should be paying attention to all the small deals, too. These smaller transactions, when pursued as part of a deliberate and systematic M&A program, tend to yield strong returns over the long run with comparatively low risk. And, based on our research, companies’ ability to successfully manage these deals can be a central factor in their ability to withstand economic shocks. 1 Martin Hirt, Sven Smit, Chris Bradley, Robert Uhlaner, Mihir Mysore, Yuval Atsmon, and Nicholas Northcote, “ Getting ahead of the next stage of the coronavirus ,” April 2020.

The execution of such a programmatic M&A strategy is not easy, however. Consider the situation at one global cosmetics company (a hypothetical case based on real-world experiences). Enthusiastic executives all had different ideas about which M&A opportunities the company should pursue (exhibit).

Undue influences

The hypothetical case of the global cosmetics company points to two common cognitive biases that can emerge when any company attempts to pursue programmatic M&A: the shiny-object syndrome and Maslow’s hammer.

The shiny-object syndrome —also known as extreme distraction. Companies that continually chase down the next new thing run the risk of pursuing initiatives in the wrong order, skipping foundational tasks, or duplicating efforts and investments.

The M&A team at the cosmetics company, for instance, was reactive. It was swayed by deals sourced by third parties, and it ended up inventing growth strategies around possible, exciting targets without a clear understanding of how they could generate value.

Maslow’s hammer. In his 1966 book The Psychology of Science (HarperCollins), psychologist Abraham Maslow stated, “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” This is the approach the cosmetics company favored—establishing a well-organized M&A team but then using it to drive almost all growth rather than applying it only to those opportunities best suited to be bought, not built.

Without an M&A blueprint to provide an incontrovertible fact base and action plan, the cosmetics company’s efforts to implement programmatic deal making turned into a quixotic, time-wasting effort.

The CEO was pushing for a big bet on digital given the company’s superior financial position. Some senior leaders proposed expansion in greater China, the fastest-growing market for premium cosmetics. Other business-unit leaders saw poten­tial in the markets for organic products and men’s grooming. All had their own agendas (see sidebar, “Undue influences”).

Propelled by a healthy dose of FOMO (or fear of missing out) but lacking a clear set of priorities, the M&A team made multiple small bets on a range of businesses—even on some unexpected targets in adjacent markets (such as pet grooming). But the team did not have a clear plan for creating value from these targets nor for integrating them into the current business structure. The result? The organization ended up wasting time and resources on deals that were mostly unsuccessful, and its executives unintentionally created an unwieldy portfolio of businesses.

The M&A blueprint prompts business leaders to conduct a thorough self-assessment along with a comprehensive market assessment.

As this example illustrates, success in programmatic M&A requires much more than just executing on a long string of deals. Acquirers must articulate exactly why and where they need M&A to deliver on specific themes and objectives underlying their overarching corporate strategies. In addition, they must give careful thought as to how they plan to pursue programmatic M&A—including constructing a high-level business case and preliminary integration plans for each area in which they want to pursue M&A.

Taken together, these factors combine into what we call an M&A blueprint. In this article we discuss how it can be implemented to help organizations remain unrelentingly focused on their investment thesis throughout the deal process. Having a clear M&A blueprint is even more critical as com­panies begin to consider how to rebound from COVID-19. Without an M&A blueprint, it will be more difficult for companies to distinguish between through-cycle opportunities  that are consistent with their corporate strategy and “low hanging, distressed asset” deals that are not.

M&A blueprint: The building blocks

The M&A blueprint can help executives answer three main questions: Why and where should we use programmatic M&A to achieve our corporate strategy? And how should we use programmatic M&A to achieve our corporate strategy? Answering these questions will require asking still more clarifying questions about specific organizational strengths and capabilities, resources available, and other inputs to effective deal making.

Understanding ‘why’ and ‘where’

The M&A blueprint prompts business leaders to conduct a thorough self-assessment along with a comprehensive market assessment. The self-assessment helps establish the baseline from which to identify gaps in corporate ambitions as well as the opportunities for M&A to fill these gaps. It involves examining a company’s key sources of competitive advantage and testing their scalability to determine whether they would still play to the company’s advantage after a transaction. For its part, the market assessment acts as a “sense check” for business leaders, ensuring that the company’s M&A strategy capitalizes on the most recent and relevant trends, accounts for potential disruptions, and acknowledges competitors’ likely actions and reactions.

An M&A blueprint should also define any boundary conditions, or limits to the company’s use of M&A. These conditions, which are typically imposed by the CFO or the board investment committee, provide an important reality check: they define the con­straints on certain types or sizes of deals, thereby further narrowing the scope of potential targets. In setting these conditions, business leaders should account for preexisting financial hurdles—for instance, a rule that “deals must be accretive in the first year” likely would not apply to deals targeting growth and might therefore overly constrain M&A activity. Establishing these boundary conditions at the outset—with explicit agreement from the CFO and the board—can help put teeth into investment commitments and align everyone on negotiable and nonnegotiable terms.

Taken together, the self-assessment, market assessment, and review of boundary conditions can help executives understand the circumstances under which the pursuit of M&A makes the most sense, as well as the markets they are best positioned to enter. Indeed, the output of business leaders’ discussions about “why and where” will be a set of M&A themes that reflect the company’s best value-creation opportunities—those for which the company has the capabilities and resources to achieve intended strategic goals.

Would you like to learn more about our Strategy & Corporate Finance Practice ?

What does a good M&A theme entail? For each theme, senior leaders should identify important deal criteria (categorizing potential targets by geog­raphy, sales channel, product type, and so on) as well as standard screening metrics like company size, number of employees, revenue growth, product port­folio, ownership, and so on. With this detailed information, organizations and M&A deal teams can continually cultivate potential targets within focused M&A themes while still being opportunistic about deals that present themselves.

Once these themes have been identified, business leaders should test them to ensure that they can execute against them—for instance, are there enough targets available, and do the right targets exist to fill gaps in the company’s capabilities? The M&A blueprint will be particularly critical in target-rich environments to help narrow down the list of potentials.

A “gold standard” M&A blueprint is detailed and focused on critical competitive information (value-creation levers, company capabilities, and so on). To understand whether their companies’ M&A themes are detailed enough, business leaders should consider whether they would be comfortable broadcasting those themes to competitors. The answer should be “no.” If the answer is “yes,” more work on the blueprint will be needed, as it and the related themes are likely not specific enough to be useful to M&A teams.

Understanding ‘how’

An M&A blueprint also prompts senior leaders to come up with a plan for “how” they will use M&A to further their overarching corporate strategies. Specifically, the M&A blueprint should delineate the high-level business case and preliminary integration plans associated with each M&A theme.

The business case should explain how the acqui­ring company plans to add value to the target or targets within a given M&A theme—for instance, the capital and operating expenditures needed (beyond the acquisition price) to integrate and scale the asset or assets. It should also outline the operational changes and capabilities that will be required to integrate the new assets—for instance, the creation of a new business unit or a set of new business processes to manage an acquired digital platform.

One large US healthcare company had committed to a strategy of building scale in its services businesses through M&A. First, it consolidated existing disparate service businesses under a new brand and organized them into three distinct units: pharmacy-care services, diversified health and wellness services, and data-analytics and tech­nology services. These became their three M&A themes. Then, over a ten-year period, this program­matic acquirer closed more than 60 deals, spending well over $20 billion, as it sought to fill out its portfolio along these three themes. The organization knew where it wanted to play and how.

Of course, the business case should include a preliminary integration plan for the acquired asset or assets that is consistent with the deal’s value-creation thesis—for instance, all shared services will be absorbed by the acquirer, and the target company’s product portfolio will be cross-sold to the acquirer’s existing customers.

Through their use of the M&A blueprint, business leaders can stay focused on those parts of the deal that can create the most value—especially impor­tant when companies are pursuing multiple deals within the same M&A theme. What’s more, they can prepare functional leaders, suppliers, and others well in advance for the actions they may need to take to integrate an asset or multiple assets.

How lots of small M&A deals add up to big value

M&a blueprint: putting it all together.

An M&A blueprint cannot and should not be developed based on “gut instinct” by a single execu­tive or defined post hoc to validate the theory behind an exciting deal. An executive or business-unit leader should lead its development but should be supported by corporate-strategy and corporate-development executives. The blueprint itself can take the form of a frequently updated and disseminated written report, or it can be a standing agenda item in every M&A and corporate-strategy meeting. Regardless of format, it can help decision makers assess critical factors relating to deal sourcing, due diligence, and integration planning before making any moves and taking steps to identify targets.

Looking back at the case of the cosmetics company, it becomes clear how an M&A blueprint could have helped the organization prioritize a bunch of scattershot ideas into a comprehensive programmatic M&A strategy.

With its market assessment, for instance, it might have seen that the market for digital cosmetics is projected to grow five times faster than the market for nondigital cosmetics. What’s more, market data might have revealed that customers want and expect to buy cosmetics through digital channels, and that there is no clear leader in the space. In its self-assessment, the M&A team might also have seen a gap in the company’s product portfolio com­pared with peers. And a look at boundary conditions might have revealed the time and latitude required to pay off initial acquisition investments, enabling the team to look beyond “base hit” deals with lower acquisition costs.

The M&A blueprint would have led the cosmetics company to a different outcome—perhaps a laser focus on acquiring the set of assets and capabilities needed to build a digital platform for selling cosmetics.

Spending time up front creating an M&A blueprint will pay off over the long term—particularly given the volume of deals associated with a programmatic M&A strategy. With M&A themes and criteria well defined and understood by all, companies can not only be more proactive but also more opportunistic. The top team will be aligned on strategy and focused on deal must-haves prior to reaching out to potential targets. Negotiations with potential targets can be grounded in the business case. Diligence processes can be accelerated and focused only on the most critical sources of value. Integration planning can begin early, with a focus on realizing the strategic intent of the deal rather than just stabilizing companies, people, and processes in the wake of change. Most important, the M&A blueprint can help executives tell a compelling story (inside and outside the company) about its deal-making strategy and its vision for the future.

Sophie Clarke is a consultant in McKinsey’s New Jersey office, where Liz Wol is an associate partner; Robert Uhlaner is a senior partner in the San Francisco office.

The authors wish to thank Anthony Chui, Jack Gordon, Steve Santulli, and Lexi Wang for their contributions to this article.

Explore a career with us

Related articles.

Strategy to beat the odds

Taking a longer-term look at M&A value creation

Ace Your M&A Case Study Using These 5 Key Steps

• Last Updated November, 2022

Mergers and acquisitions (M&A) are high-stakes strategic decisions where a firm(s) decides to acquire or merge with another firm. As M&A transactions can have a huge impact on the financials of a business, consulting firms play a pivotal role in helping to identify M&A opportunities and to project the impact of these decisions. 

M&A cases are common case types used in interviews at McKinsey, Bain, BCG, and other top management consulting firms. A typical M&A case study interview would start something like this:

The president of a national drugstore chain is considering acquiring a large, national health insurance provider. The merger would combine one company’s network of pharmacies and pharmacy management business with the health insurance operations of the other, vertically integrating the companies. He would like our help analyzing the potential benefits to customers and shareholders.

M&A cases are easy to tackle once you understand the framework and have practiced good cases. Keep reading for insights to help you ace your next M&A case study interview.

In this article, we’ll discuss:

• Why mergers & acquisitions happen.
• Real-world M&A examples and their implications.
• How to approach an M&A case study interview.
• An end-to-end M&A case study example.

Let’s get started!

Why Do Mergers & Acquisitions Happen?

There are many reasons for corporations to enter M&A transactions. They will vary based on each side of the table. 

For the buyer, the reasons can be:

• Driving revenue growth. As companies mature and their organic revenue growth (i.e., from their own business) slows, M&A becomes a key way to increase market share and enter new markets.
• Strengthening market position. With a larger market share, companies can capture more of an industry’s profits through higher sales volumes and/or greater pricing power, while vertical integration (e.g., buying a supplier) allows for faster responses to changes in customer demand.
• Capturing cost synergies. Large businesses can drive down input costs with scale economics as well as consolidate back-office operations to lower overhead costs. (Example of scale economies: larger corporations can negotiate higher discounts on the products and services they buy. Example of consolidated back-office operations: each organization may have 50 people in their finance department, but the combined organization might only need 70, eliminating 30 salaries.)
• Undertaking PE deals. Private equity firms will buy a majority stake in a company to take control and transform the operations of the business (e.g., bring in new top management or fund growth to increase profitability).
• Accessing new technology and top talent. This is especially common in highly competitive and innovation-driven industries such as technology and biotech. 

For the seller, the reasons can be: 

• Accessing resources. A smaller business can benefit from the capabilities (e.g., product distribution or knowledge) of a larger business in driving growth.
• Gaining needed liquidity. Businesses facing financial difficulties may look for a well-capitalized business to acquire them, alleviating the stress.
• Creating shareholder exit opportunities . This is very common for startups where founders and investors want to liquidate their shares.

There are many other variables in the complex process of merging two companies. That’s why advisors are always needed to help management to make the best long-term decision.

Real-world Merger and Acquisition Examples and Their Implications

Let’s go through a couple recent merger and acquisition examples and briefly explain how they will impact the companies.

Nail the case & fit interview with strategies from former MBB Interviewers that have helped 89.6% of our clients pass the case interview.

KKR Acquisition of Ocean Yield

KKR, one of the largest private equity firms in the world, bought a 60% stake worth over $800 million in Ocean Yield, a Norwegian company operating in the ship leasing industry. KKR is expected to drive revenue growth (e.g., add-on acquisitions) and improve operational efficiency (e.g., reduce costs by moving some business operations to lower-cost countries) by leveraging its capital, network, and expertise. KKR will ultimately seek to profit from this investment by selling Ocean Yield or selling shares through an IPO.

ConocoPhillips Acquisition of Concho Resources

ConocoPhillips, one of the largest oil and gas companies in the world with a current market cap of $150 billion, acquired Concho Resources which also operates in oil and gas exploration and production in North America. The combination of the companies is expected to generate financial and operational benefits such as:

• Provide access to low-cost oil and gas reserves which should improve investment returns.
• Strengthen the balance sheet (cash position) to improve resilience through economic downturns.
• Generate annual cost savings of $500 million.
• Combine know-how and best practices in oil exploration and production operations and improve focus on ESG commitments (environmental, social, and governance).

How to Approach an M&A Case Study Interview

Like any other case interview, you want to spend the first few moments thinking through all the elements of the problem and structuring your approach. Also, there is no one right way to approach an M&A case but it should include the following: 

• Breakdown of value drivers (revenue growth and cost synergies) 
• Understanding of the investment cost
• Understanding of the risks. (For example, if the newly formed company would be too large relative to its industry competitors, regulators might block a merger as anti-competitive.) 

Example issue tree for an M&A case study: 

• Will the deal allow them to expand into new geographies or product categories?
• Will each of the companies be able to cross-sell the others’ products? 
• Will they have more leverage over prices? 
• Will it lower input costs? 
• Decrease overhead costs? 
• How much will the investment cost? 
• Will the value of incremental revenues and/or cost savings generate incremental profit? 
• What is the payback period or IRR (internal rate of return)? 
• What are the regulatory risks that could prevent the transaction from occurring? 
• How will competitors react to the transaction?
• What will be the impact on the morale of the employees? Is the deal going to impact the turnover rate? 

An End-to-end BCG M&A Case Study Example

Case prompt:

Your client is the CEO of a major English soccer team. He’s called you while brimming with excitement after receiving news that Lionel Messi is looking for a new team. Players of Messi’s quality rarely become available and would surely improve any team. However, with COVID-19 restricting budgets, money is tight and the team needs to generate a return. He’d like you to figure out what the right amount of money to offer is.

First, you’ll need to ensure you understand the problem you need to solve in this M&A case by repeating it back to your interviewer. If you need a refresher on the 4 Steps to Solving a Consulting Case Interview , check out our guide.

Second, you’ll outline your approach to the case. Stop reading and consider how you’d structure your analysis of this case. After you outline your approach, read on and see what issues you addressed, and which you didn’t consider. Remember that you want your structure to be MECE and to have a couple of levels in your Issue Tree .

Example M&A Case Study Issue Tree

• Revenue: What are the incremental ticket sales? Jersey sales? TV/ad revenues?
• Costs: What are the acquisition fees and salary costs? 
• How will the competitors respond? Will this start a talent arms race?  
• Will his goal contribution (the core success metric for a soccer forward) stay high?
• Age / Career Arc? – How many more years will he be able to play?
• Will he want to come to this team?
• Are there cheaper alternatives to recruiting Messi?
• Language barriers?
• Injury risk (could increase with age)
• Could he ask to leave our club in a few years?
• Style of play – Will he work well with the rest of the team?

Analysis of an M&A Case Study

After you outline the structure you’ll use to solve this case, your interviewer hands you an exhibit with information on recent transfers of top forwards.

In soccer transfers, the acquiring team must pay the player’s current team a transfer fee. They then negotiate a contract with the player.

From this exhibit, you see that the average transfer fee for forwards is multiple is about $5 million times the player’s goal contributions. You should also note that older players will trade at lower multiples because they will not continue playing for as long. 

Based on this data, you’ll want to ask your interviewer how old Messi is and you’ll find out that he’s 35. We can say that Messi should be trading at 2-3x last season’s goal contributions. Ask for Messi’s goal contribution and will find out that it is 55 goals. We can conclude that Messi should trade at about $140 million. 

Now that you understand the up-front costs of bringing Messi onto the team, you need to analyze the incremental revenue the team will gain.

Calculating Incremental Revenue in an M&A Case Example

In your conversation with your interviewer on the value Messi will bring to the team, you learn the following: 

• The team plays 25 home matches per year, with an average ticket price of $50. The stadium has 60,000 seats and is 83.33% full.
• Each fan typically spends $10 on food and beverages.
• TV rights are assigned based on popularity – the team currently receives $150 million per year in revenue.
• Sponsors currently pay $50 million a year.
• In the past, the team has sold 1 million jerseys for $100 each, but only receives a 25% margin.

Current Revenue Calculation:

• Ticket revenues: 60,000 seats * 83.33% (5/6) fill rate * $50 ticket * 25 games = $62.5 million.
• Food & beverage revenues: 60,000 seats * 83.33% * $10 food and beverage * 25 games = $12.5 million.
• TV, streaming broadcast, and sponsorship revenues: Broadcast ($150 million) + Sponsorship ($50 million) = $200 million.
• Jersey and merchandise revenues: 1 million jerseys * $100 jersey * 25% margin = $25 million.
• Total revenues = $300 million.

You’ll need to ask questions about how acquiring Messi will change the team’s revenues. When you do, you’ll learn the following: 

• Given Messi’s significant commercial draw, the team would expect to sell out every home game, and charge $15 more per ticket.
• Broadcast revenue would increase by 10% and sponsorship would double.
• Last year, Messi had the highest-selling jersey in the world, selling 2 million units. The team expects to sell that many each year of his contract, but it would cannibalize 50% of their current jersey sales. Pricing and margins would remain the same.
• Messi is the second highest-paid player in the world, with a salary of $100 million per year. His agents take a 10% fee annually.

Future Revenue Calculation:

• 60,000 seats * 100% fill rate * $65 ticket * 25 games = $97.5 million.
• 60,000 seats * 100% * $10 food and beverage * 25 games = $15 million.
• Broadcast ($150 million*110% = $165 million) + Sponsorship ($100 million) = $265 million.
• 2 million new jerseys + 1 million old jerseys * (50% cannibalization rate) = 2.5 million total jerseys * $100 * 25% margin = $62.5 million.
• Total revenues = $440 million.

This leads to incremental revenue of $140 million per year. 

• Next, we need to know the incremental annual profits. Messi will have a very high salary which is expected to be $110 million per year. This leads to incremental annual profits of $30 million.
• With an upfront cost of $140 million and incremental annual profits of $30 million, the payback period for acquiring Messi is just under 5 years.

Presenting Your Recommendation in an M&A Case

• Messi will require a transfer fee of approximately $140 million. The breakeven period is a little less than 5 years. 
• There are probably other financial opportunities that would pay back faster, but a player of the quality of Messi will boost the morale of the club and improve the quality of play, which should build the long-term value of the brand.
• Further due diligence on incremental revenue potential.
• Messi’s ability to play at the highest level for more than 5 years.
• Potential for winning additional sponsorship deals.

5 Tips for Solving M&A Case Study Interviews

In this article, we’ve covered:

• The rationale for M&A.
• Recent M&A transactions and their implications.
• The framework for solving M&A case interviews.
• AnM&A case study example.

Still have questions?

If you have more questions about M&A case study interviews, leave them in the comments below. One of My Consulting Offer’s case coaches will answer them.

Other people prepping for mergers and acquisition cases found the following pages helpful:

• Our Ultimate Guide to Case Interview Prep
• Types of Case Interviews
• Consulting Case Interview Examples
• Market Entry Case Framework
• Consulting Behavioral Interviews

Help with Case Study Interview Prep

Thanks for turning to My Consulting Offer for advice on case study interview prep. My Consulting Offer has helped almost 89.6% of the people we’ve worked with get a job in management consulting. We want you to be successful in your consulting interviews too. For example, here is how Kathryn Kelleher was able to get her offer at BCG.

Leave a Comment Cancel reply

Save my name, email, and website in this browser for the next time I comment.

© My CONSULTING Offer

3 Top Strategies to Master the Case Interview in Under a Week

We are sharing our powerful strategies to pass the case interview even if you have no business background, zero casing experience, or only have a week to prepare.

No thanks, I don't want free strategies to get into consulting.

We are excited to invite you to the online event., where should we send you the calendar invite and login information.

Related Expertise: Business Transformation , Post-Merger Integration , Corporate Finance and Strategy

Lessons from Eight Successful M&A Turnarounds

November 12, 2018  By  Ib Löfgrén ,  Lars Fæste ,  Tuukka Seppä ,  Jonas Cunningham ,  Niamh Dawson ,  Daniel Friedman , and  Rüdiger Wolf

M&A is tough, especially when it involves an underperforming asset that needs a turnaround. About 40% of all deals, on average, require some kind of turnaround, whether because of minor problems or a full-blown crisis. With M&A valuations now at record levels, companies must pay higher prices simply to get a deal done. In this environment, leaders need a highly structured approach to put the odds in their favor.

The greatest M&A turnarounds

Automotive: groupe psa + opel, biopharmaceuticals: sanofi + genzyme, media: charter communications + time warner cable + bright house networks, industrial equipment: konecranes + mhps, retail grocery: coop norge + ica norway, shipbuilding: meyer werft + turku shipyard, retail: office depot + officemax, energy: vistra + dynegy.

We recently analyzed large turnaround deals—those in which the target was at least half the size of the buyer in terms of revenue, with the target’s profitability lagging its industry median by at least 30%. Our key finding was that these deals can be just as successful as smaller deals that don’t require a turnaround in terms of value creation. However, they have a much greater variation in outcomes. In other words, the risks are greater and the potential returns are also greater. Critically, our analysis identified four key factors that lead to success in turnaround deals.

1. These buyers use a “full potential” approach to identify all possible areas of improvement. Rather than merely integrating the target company to capture the most obvious synergies, a full-potential approach generates improvements to the target company, captures all synergies, and capitalizes on the opportunity to make needed upgrades to the acquirer as well. (See the exhibit.)

Copy Shareable Link

2. These buyers have a clear rationale for how the deal will create value, and they take a structured, holistic approach:

• They initially fund the journey by generating quick wins that deliver cash to the bottom line quickly, typically restructuring back-end operations to reduce costs and increase efficiency.
• Then they pivot from cost-cutting to growth measures in order to win in the medium term. They revamp the portfolio, selling off some business units and assets and buying others that align with their strategic direction.
• Finally, they invest in the future, often focusing on building digital businesses, upgrading processes with AI, and investing in R&D to secure long-term growth and expanding margins.

Winning buyers have a clear rationale, execute with rigor and speed, and address culture upfront.

3. Successful acquirers execute their plan with rigor and speed. They begin developing plans long before the deal closes, so that they can begin implementation on day one, seamlessly combining the core elements of post-merger integration and a turnaround program. These acquirers are extremely diligent in building clear milestones and objectives into the plan to ensure that key integration and improvement steps are achieved on time. Throughout the process, they move as quickly as possible, regarding speed as their friend. Moreover, they are confident enough to make their targets public and to systematically report on progress.

4. Winning acquirers address culture upfront by reorienting the organization around collaboration, accountability, and bottom-line value. Culture can often be hard to quantify or pin down, but it’s critical in shaping a company’s performance following an acquisition. (See Breaking the Culture Barrier in Postmerger Integrations , BCG Focus, January 2016.)

The case studies on the following pages illustrate these four principles. They offer clear evidence that M&A-based turnarounds may be hard but carry significant opportunity when done right.

Groupe PSA, the parent company of Peugeot, Citroën, Vauxhall Motors, and DS Automobiles, was languishing after the 2008 financial crisis. Demand was particularly slow to recover in Europe, which accounted for more than two-thirds of the company’s sales. After losing $5.4 billion in 2012 and $2.5 billion in 2013, Groupe PSA struck a deal to sell 14% of the company to Chinese competitor Dongfeng and another 14% to the French government, for $870 million each. With the capital raised, it launched a turnaround program in 2014. As part of the program, Groupe PSA bought the Opel brand, which had lost about $19 billion since 1999, from General Motors. The deal was finalized in August 2017.

The turnaround has a strong growth element with a focus on strengthening brands. A sales offensive was built on reducing the variety of models available, offering more attractive leases (possible thanks to the company’s stronger financial services capability), and maintaining discount discipline. Cost efficiency is another important element. Limiting the number of models reduces complexity across the combined group, which reduces costs in both manufacturing and R&D. The increased scale across fewer models leads to simpler procurement and more negotiating clout with suppliers.

The turnaround continued at a relentless pace through the first half of 2018, with profitability restored at Opel and margins continuing to rise for Groupe PSA as a whole.

Overall, gross margins have increased by 35% since 2013. During the same period, Groupe PSA has rebounded from losing money to an EBIT margin of 6%, in line with competitors such as General Motors and ahead of Hyundai and Kia. Perhaps most impressive, the company’s market cap has increased more than 700%. In all, the transformation has allowed Groupe PSA to resume its position as one of the top-performing automakers in the world.

Key success factors in this turnaround: Groupe PSA started the turnaround by raising capital to fund the journey. That enabled it to buy GM’s Opel unit, halt steep financial losses quickly, and generate a profit within one year of the acquisition.

Raising capital allowed Groupe PSA to buy GM’s Opel unit and generate a profit within one year.

In 2009, French pharmaceutical company Sanofi was in acquisition mode. Many of its products were losing patent protection, and the company wanted to shift from traditional drugs into biologics. One potential target was Genzyme.

From 2000 through 2010, Genzyme had grown rapidly, but manufacturing issues at two of its facilities halted production and led to a shortage of key drugs in its portfolio. Sales plunged, the US Food and Drug Administration issued fines, and investors called for management changes. But many features of the company still met Sanofi’s needs, including a lucrative orphan drug business with no patent cliff and a strong history of innovation. Sanofi made an offer: $20 billion, or $74 per share, which was roughly Genzyme’s value before the manufacturing problems hit.

Management laid out a bold ambition and moved fast. The company streamlined manufacturing, opening a new plant to reduce the drug shortage and simplifying operations to remove bottlenecks at existing plants. Next, it moved sales and marketing for some of Genzyme’s businesses, including oncology, biosurgery, and renal products, under the Sanofi brand. It also reduced the overall sales force by about 2,000 people.

Genzyme’s R&D pipeline was integrated into Sanofi, and a new portfolio review process led to the cessation of some studies and the reprioritizing of others. And about 30% of Genzyme’s cost base was reduced through the integration with Sanofi. Genzyme’s diagnostics unit was sold off, and about 8,000 full-time employees were eliminated in the EU and North America.

The moves generated positive results fast. Overall, the integration led to about $700 million in cost reductions through synergies. By 2011, the company was back in expansion mode with 5% revenue growth, increasing to 17% in 2012. Only about 13% of Sanofi’s revenue came from Genzyme products, but these were poised for strong growth, positioning Sanofi as a global leader in rare-disease therapeutics and spurring its evolution into a dominant player in biologics.

Key success factors in this turnaround: Sanofi laid out a bold ambition in its acquisition of Genzyme, and it executed a strategic repositioning with extreme speed, cutting costs and increasing top-line growth.

Genzyme executed a strategic repositioning with speed, cutting costs and increasing top-line growth.

With 8% of the US market in 2014, cable TV provider Charter Communications found itself facing fierce competition for multichannel video subscribers, who usually had bundled services with increasingly important broadband subscriptions. The threat came not only from other multichannel video providers in its markets—including direct-broadcast satellite services and large telcos—but from internet streaming services, as many cable subscribers were “cutting the cord” and streaming video over mobile and other devices.

To protect its market share and profits, Charter significantly expanded its subscriber base in 2015 by acquiring Time Warner Cable and Bright House Networks, which had a 20.8% and 3.6% share of the US cable market, respectively, paying $67 billion for the two businesses. The acquisitions made Charter the second-largest broadband provider and the third-largest multichannel video provider in the US.

With the deal closed, Charter launched a bold transformation that captured extensive synergies among the three businesses in areas such as overhead, product development, engineering, and IT, and it introduced uniform operating practices, pricing, and packaging. Most important, the company’s increased scale improved its bargaining power with content providers. Charter went beyond synergies in a full-potential plan to accelerate revenue growth, product development, and innovation through the increased scale, improved sales and marketing capabilities, and enhanced cable TV footprint brought about by the combination of the three companies. It improved products and services, centralized pricing decisions, and streamlined operations to achieve additional operating and capital efficiency.

As a result, Charter kept up its premerger growth trend and profitability, growing at an annual rate of 5.5% post-merger to reach $42 billion in revenues in 2017. In addition, Charter’s value creation significantly outperformed that of its peers, increasing annualized TSR to 289% from the closing of the transaction to the end of 2017.

Key success factors in this turnaround: Charter made a bold move in acquiring both Time Warner Cable and Bright House Networks. Management developed an extensive plan to generate operational synergies and rationalize the commercial offering of the new entity.

Charter developed an extensive plan to generate operational synergies and rationalize the new entity’s offering.

Konecranes is a global provider of industrial and port cranes equipment and services. Several years ago, in the face of increased competition, Konecranes was struggling to cut costs or grow organically. In 2016, it bought a business unit from Terex Corporation called Material Handling & Port Solutions (MHPS), its principal competitor. The MHPS business included several brands that complemented Konecranes’ products and services, along with some sizeable overlaps in technology and manufacturing networks.

Before the deal closed, Konecranes drafted an ambitious full-potential plan to generate about $160 million in synergies within three years through cost reductions and new business. That represented a 70% improvement over the joint company’s pro forma financials. The turnaround plan encompassed all main businesses and functions across both legacy Konecranes and MHPS operations.

As part of the preclose planning, Konecranes’ leaders designed an overall transformation to start after the merger was finalized. The program covered all business units and functions and was extremely comprehensive, including the following:

• Reducing procurement spending through increased volumes
• Consolidating service locations
• Aligning technological standards and platforms
• Closing some manufacturing sites
• Streamlining corporate functions
• Adopting more efficient processes
• Optimizing the go-to-market approach
• Identifying new avenues of growth

The full program consisted of 350 individual initiatives, organized into nine major work streams and aligned with the overall organization structure to create clear accountabilities and tie the program’s impact directly to financial results. Still, many of the initiatives were complex by nature, so solid planning and rigorous program management and reporting have been critical.

Konecranes also carried out a holistic baseline survey to assess the cultures of the two organizations and define a joint target culture. An extensive cultural development and communications plan featured strongly in the early days of the integration.

The company has reported on its progress to investors as part of its quarterly earnings calls, and two years into the three-year plan, it has hit or exceeded its targets. That performance has earned praise from investors, leading to a share price increase of more than 50% since the acquisition was announced.

Key success factors in this turnaround: The combination of competitors presented a clear opportunity to create value from synergies, but management took the more ambitious approach of using the deal as a catalyst for the combined entity to perform at its full potential. Hitting —and often exceeding—performance targets has led to a dramatic rise in the company’s stock price.

Konecranes used the deal as a catalyst for the combined entity to perform at its full potential.

Coop Norge ranked third in Norway’s competitive and consolidated retail-grocery landscape in 2014, with a 22.7% share. But the company faced a major strategic challenge from its two larger competitors, which were able to use their scale advantages to negotiate favorable prices from suppliers while opening new stores. A smaller player, ICA Norway, was in a more precarious position, with a 2014 operating loss of more than $57 million on revenue of $2.1 billion. An acquisition made sense. In buying ICA, Coop aimed to become the number-two player and so increase economies of scale in procurement and logistics. ICA stores in Norway were a strong strategic fit as well, complementing Coop’s existing locations.

After the acquisition closed, Coop rebranded all ICA supermarkets and discount stores to concentrate on fewer, winning formats and to fully leverage improvements and synergies in areas such as procurement, logistics, and store operations. Coop’s discount brand, Extra, was already showing good momentum in the market, and this was accelerated through the ICA Norway transaction.

The integration and rebranding created pride and momentum internally at ICA, which led to improved growth and financial performance at the acquiring company as well. Coop moved up to second place in the market, generated new economies of scale, and realized 87% of its expected results from synergies within just eight months of the close and 96% after two years. And because the company stayed true to its existing store strategy, it was able to lean on previous experience and maintain its long-term vision. Operating profits rose by approximately $270 million, from a loss of $160 million in 2015 to a profit of $106 million in 2016. Revenue during that period increased by 10.7%, to nearly $6 billion, of which ICA stores and Coop’s existing locations accounted for 7.8 and 2.9 percentage points, respectively.

Coop Norge’s early successes in the integration created strong momentum and a culture of success.

Key success factors in this turnaround: The early successes achieved in the integration created strong momentum and a culture of success, enabling the combined entity to increase both revenue and profits in a highly competitive market.

In the early 2010s, the global shipbuilding industry declined significantly, in part because of a contraction in the demand for ships. That left many shipyards—including the Turku yard, which operated in the sophisticated niche of cruise ships and ferries—in need of cash. When Turku’s owner, STX Finland, verged on insolvency in 2014, the Finnish government (which had a stake in STX) began looking for a new owner. Meyer Werft, a leading European shipbuilder, believed that the Turku shipyard could be operated profitably and bought 70% of the yard in September 2014. As part of the deal, Turku secured two new cruise ship projects. With the orders confirmed, Meyer Werft bought the remaining shares, becoming sole owner.

Renamed Meyer Turku Oy, the company began to integrate the shipyard’s operations and find synergies in development, procurement, and other support functions. Having negotiated up-front for new business, it was able to fill Turku’s production capacity, benefit from increased scale, and begin to boost profitability almost immediately. Critically, the deal helped restore trust among employees, which extended to other important stakeholders such as customers and lenders. Such trust is essential in an industry that hinges on building a small number of very large projects, and it was fostered by Meyer Werft’s delivery on promises right from the start.

Meyer Werft then looked to planning growth in the longer term: increasing capex to boost capacity—and profitability—still further and investing in a new crane, cabin production, and a new steel storage and pretreatment plant while modernizing existing equipment. It also entered into a joint R&D project with the University of Turku to develop more sustainable practices across a ship’s life cycle—from raw materials to manufacturing processes and beyond. And it hired 500 new workers, partially replacing retiring employees, in 2018.

As a result, the company increased revenues from $590 million in 2014 to $970 million in 2017, an annual growth rate of more than 18%. It also increased profit margins to 4% in 2017, up from a loss of 5% in the acquisition year. The company now has a stable order book out to 2024, and productivity continues to climb.

Key success factors in this turnaround: In addition to making operational improvements, Meyer Werft was able to foster trust among employees and customers by delivering on its promises and showing its commitment through long-term investment.

Meyer Werft fostered trust among employees and customers by delivering on its promises.

In early 2013, Office Depot and OfficeMax were in a similar situation: online retailers were threatening their business. They agreed on a merger, with the goal of generating synergies by reducing the cost of goods sold, consolidating support functions to cut overhead, and eliminating redundancies in the distribution and sales units.

Because the two companies were merging as equals—rather than one buying the other— some decisions were difficult to make before the close (for example, which IT system the combined entity would use and where headquarters would be located). But management was able to define synergy targets and begin planning the integration during the six months before the close. The companies also created an integration management office (IMO) that addressed areas that were critical for business continuity, specifying which units would be integrated and which would be left as is.

The IMO created playbooks for 15 integration teams, addressing finance, marketing, the supply chain, and e-commerce operations, and developed a plan for communication, talent management, and change management for the overall effort. It categorized all major decisions into two groups: those that could be made prior to the close (because the steering committee was aligned) and those that couldn’t be made during that period. For decisions in the second category, the IMO laid out the two or three best options to consider. Critically, the IMO’s rigorous plans included timelines for how the businesses would evolve over the first, second, and third years of the merger, helping to align functions and manage interdependencies.

Once the deal closed, all this preparation allowed the two organizations to start the integration process immediately on day one. Within weeks, they had agreed on a leadership team for the combined entity, a headquarters site, and an IT platform. The organization was largely redesigned in just two months—a remarkably rapid effort given that it ultimately affected about 9,000 employees.

Most important, the smooth integration process allowed the companies to be extremely rigorous in capturing more synergies—and doing it faster—than anticipated. For example, they integrated the e-commerce businesses in a way that allowed them to retain most key customers. In the first year after the deal closed, the company captured cost savings close to three times management’s original targets; cost savings of the end-state organization were 50% more. In all, the merger unlocked about $700 million, putting the new company in a much better competitive position.

An extremely rigorous integration plan allowed Office Depot and OfficeMax to exceed cost savings targets.

Key success factors in this turnaround: Office Depot and OfficeMax merged in response to the threat of online competition. An extremely rigorous integration plan allowed the combined business to dramatically exceed its cost savings targets.

Texas-based Vistra Energy operates in 12 US states and delivers energy to nearly 3 million customers, with a mix of natural gas, coal, nuclear, and solar facilities enabling about 41,000 megawatts of generation capacity. It was formed in October 2016 when its predecessor emerged from a protracted bankruptcy process.

At the conclusion of bankruptcy proceedings, Vistra underwent a corporate restructuring, moving from a siloed operating model to a unified organization with a centralized leadership team and common objectives. New governance structures facilitated more consistent and rigorous corporate decision making, with an emphasis on capital allocation and risk management. In addition, management immediately launched a turnaround effort to reduce costs and improve performance across the entire organization.

In all, the company managed to reduce costs and enhance EBITDA by approximately $400 million per year, exceeding its original target by $40 million without any drop in service levels or safety standards. At the same time, investments in new service offerings—many enabled by digital technology—boosted customer satisfaction.

In 2017, Vistra announced the acquisition of Dynegy, one of its largest peers, resulting in the largest competitive integrated power company in the US. The combined entity offers significant synergies, with Vistra now on track to deliver $500 million of additional EBITDA per year, along with annual after-tax free cash flow benefits of nearly $300 million and $1.7 billion in tax savings. The deal also allows Vistra to expand into new US markets, diversifying its operations and earnings, reducing its overall business risk, and creating a platform for future growth.

The addition of Dynegy also supports Vistra’s shift toward a more modern power generation fleet based on natural gas. The company preceded that deal with the acquisition of a large, gas-fueled power plant in west Texas, and it also retired several uneconomical coal-burning facilities. In all, Vistra’s generation profile has evolved from approximately two-thirds coal-fueled sources to more than 50% natural gas and renewables.

With these measures—a successful turnaround followed by two strategic acquisitions—Vistra has positioned itself to sustainably create value for its shareholders in a very competitive industry.

Key success factors in this turnaround: Vistra’s acquisition of Dynegy represented both a pivot to growth and an opportunity to extend cost savings to an acquired operating platform.

Managing Director & Partner

Managing Director & Senior Partner; Global Leader, BCG Transform Practice

Project Leader

Partner & Director, Change, Transaction & Integration Excellence

Managing Director & Senior Partner; Global Leader of Transactions & Integrations

Los Angeles

Managing Director & Senior Partner

ABOUT BOSTON CONSULTING GROUP

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.

Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.

© Boston Consulting Group 2024. All rights reserved.

For information or permission to reprint, please contact BCG at [email protected] . To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcg.com . Follow Boston Consulting Group on Facebook and X (formerly Twitter) .

Subscribe to our M&A, Transactions, and PMI E-Alert.

Asking the better questions that unlock new answers to the working world's most complex issues.

Trending topics

AI insights

EY podcasts

EY webcasts

Operations leaders

Technology leaders

Marketing and growth leaders

Cybersecurity and privacy leaders

Risk leaders

EY Center for Board Matters

EY helps clients create long-term value for all stakeholders. Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate.

Artificial Intelligence (AI)

Strategy, transaction and transformation consulting

Technology transformation

Tax function operations

Climate change and sustainability services

EY Ecosystems

Supply chain and operations

EY Partner Ecosystem

Explore Services

We bring together extraordinary people, like you, to build a better working world.

• Experienced professionals

MBA and advanced-degree students

Student and entry level programs

Contract workers

EY-Parthenon careers

Discover how EY insights and services are helping to reframe the future of your industry.

Case studies

Energy and resources

How data analytics can strengthen supply chain performance

13-Jul-2023 Ben Williams

How Takeda harnessed the power of the metaverse for positive human impact

26-Jun-2023 Edwina Fitzmaurice

Banking and Capital Markets

How cutting back infused higher quality in transaction monitoring

11-Jul-2023 Ron V. Giammarco

At EY, our purpose is building a better working world. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets.

EY research: Cybersecurity fears on the rise among US workers, with a vast majority concerned about AI in cybersecurity

06-May-2024 Lizzie McWilliams

EY Announces Entrepreneur Of The Year® 2024 Greater Los Angeles Award Finalists

03-May-2024 Victoria Kasper

EY Announces Entrepreneur Of The Year® 2024 Michigan and Northwest Ohio Award Finalists

01-May-2024 Victoria Kasper

No results have been found

Recent Searches

BEPS 2.0: as policies evolve, engagement is key

It remains to be seen whether the US will align its tax law with the OECD/G20’s global BEPS 2.0 rules. MNEs will feel the impact in 2024. Learn more.

How GenAI strategy can transform innovation

Companies considering or investing in a transformative GenAI strategy should tie generative artificial intelligence use cases to revenue, cost and expense. Learn more

Top five private equity trends for 2024

Read about the five key trends private equity firms will emphasize in 2024 as they create value

Select your location

close expand_more

M&A, divestitures and JVs can fuel growth. A clear strategy, sourcing the right deal, sound diligence and smooth integration are crucial.

Whether pursuing scale, new technology or entry into new markets, we can help you achieve your strategic objectives through mergers and acquisitions (M&A), divestitures and joint ventures.

EY M&A consulting helps you:

• Perform portfolio reviews to understand your best path to growth and competitive advantage 
• Assess the strategic fit of a business by evaluating the market opportunity and potential synergies
• Conduct diligence, including financial, tax, commercial, operational, regulatory, IT and cyber
• Determine the right valuation and approach to capital markets for funding
• Operationalize the deal

M&amp;A outlook points to gradual rebound in deal market in 2024</p> "> M&A outlook points to gradual rebound in deal market in 2024

Our latest M&A thinking

How CEOs juggle transformation priorities – the art of taking back control

EY CEO survey highlights how CEOs consider AI transformation, ESG and M&A to navigate between immediate profits and future sustainability aspirations. Read more.

Building a corporate unicorn

Learn how to approach digital business by building a unicorn with a venture mindset and succeed with your digital investment.

Macro Bites: M&A deal activity in 2024’s nuanced macroeconomic environment

A nuanced macroeconomic environment provides opportunities for increased M&A deal activity in 2024.

M&A outlook points to gradual rebound in deal market in 2024

The EY-Parthenon Deal Barometer indicates recovery in 2024 M&A activity based on economic and market indicators. Learn more about the M&A outlook for 2024.

Why Europe’s CEOs are confident but cautious, pushing AI and pausing ESG

The latest EY European CEO Outlook survey finds country variation in resilience, but solid AI strategy remains elusive for many. Read more.

EY M&A sector of the year: Tech leads M&A activity in 2023

Find out the EY M&A sector of the year and which sectors to watch in 2024.

The Navigator: perspectives on financial services M&A

Financial institutions are building competitive advantage through M&A. Read on to learn more.

How cloud can drive value in M&A transactions

A robust strategy can bring value to both buyers and sellers throughout the M&A lifecycle. Read more.

Watch now: How AI can unlock value in M&A transactions

Mitch Berlin, EY Americas Vice Chair, Strategy and Transactions, shares how AI can bring speed and scale to the M&A process.

M&A case studies

How an acquisition helped Orifarm prepare a prescription for growth 

EY teams help founder-run Orifarm, a Danish pharmaceuticals company, embark on the path to transformation.

Case study: How a Nordic SaaS player unlocked potential in a global lockdown

A bold strategy and deep, multi-disciplined M&A experience turned “it can’t be done” into a sale that facilitated outstanding outcomes. Learn more.

How the right buyer helped a family grow global plant-based food production

Innovation in plant-based meat could have a major role in promoting healthier food alternatives and sustainable environmental practices.

Growth strategy through M&A

CEO Survey: Focus on GenAI strategy to accelerate growth

Our survey finds US CEOs preparing for a new normal of costly capital while M&A intentions remain strong and divestment plans are robust.

Digital M&A valuation: How CFOs and CDOs can get it right

Investors can use unique digital M&A valuation tools during due diligence to reduce overpayment risk.

Three ways c-suite execs can enhance digital M&A commercial strategy

Learn how traditional companies acquiring digital assets can embrace and interact with digital natives and can create outsized returns

The new corporate strategy playing field

Corporate strategy is being upended by new stakeholders, competitors and the need to quickly add differentiating capabilities.

Three important digital M&A product strategy questions for the c-suite

Product development can be transformed with digital M&A if leaders articulate how technology and innovation leads to growth and value. Read our insights.

How M&A revenue synergies can sweeten digital transactions

EY-Parthenon research shows digital deals that focus on revenue synergies can lead to higher valuations and premiums.

M&A integration insights

What drives one-time M&A integration costs and how to estimate them

Do you know what drives acquisition costs? Learn more.

How rapid M&A IT integration can cut costs and boost M&A cybersecurity

M&A IT integration strategies can speed up deal synergies, reduce costs and free capital for growth and value creation. Read more

Four talent challenges in digital M&A culture integration

Tech company acquisitions may include talent: founders, engineers and technologists whose knowledge can drive digital M&A culture integration. Learn more.

Three ways a data clean room can help you realize M&A synergies faster

The three main benefits to using an M&A deal clean room. Read our report.

Sector M&A reports

Private Equity Pulse: key takeaways from Q4 2023

The PE Pulse is a quarterly report that provides data and insights on private equity market activity and trends. Read the latest report.

How ecosystems can help fill the life sciences innovation gap

An expanded ecosystem can help life sciences companies replenish their pipelines ahead of a looming patent cliff. Read our report.

How the right M&A can help hospital CEOs cure shrinking margins

M&A is an important tool for US hospitals to address increasing costs and the continuing pressure to reduce reimbursements.

Is there more than one path toward long-term value?

An evolving portfolio strategy is integral to generating returns and competing in the energy transition. How can companies make no regret decisions?

Macroeconomic Executive briefings

Get the latest global economic insights every month.

How EY can help

M&A advisory: Buy and integrate

Discover M&A advisory services from EY when you buy and integrate. We help enable strategic growth through integrated mergers and acquisitions, joint ventures and alliances.

Service Leader

EY Americas Strategy and Transactions Buy & Integrate Leader

EY Global Buy and Integrate Leader

EY-Parthenon Chicago Office Leader

Strategy consulting

EY-Parthenon professionals recognize that CEOs and business leaders are tasked with achieving maximum value for their organizations’ stakeholders in this transformative age. We challenge assumptions to design and deliver strategies that help improve profitability and long-term value.

Mergers and acquisitions integration services

Our M&A integration services help you integrate assets while preserving value, accelerating synergy realization and minimizing transaction risk. Learn more.

M&A due diligence consulting

Learn how EY M&A due diligence teams can help your business identify transaction value drivers, improve deal structures and mitigate risks.

IT M&A strategy consulting

Our M&A strategy teams design and deliver IT, cyber and digital strategies to improve your enterprise value whether buying, merging or divesting a business.

Joint ventures and alliances

Find out how EY teams can help with joint ventures and strategic alliances. Contact the EY joint venture team to help your business respond to change.

M&A tools: Connected Capital Technologies

Explore an integrated suite of M&A technologies that bring deeper analysis and faster insights to enable better decision-making around your capital and transaction strategies through to execution. Welcome to the future of M&A.

Cybersecurity due diligence in M&A and divestitures

Learn how EY teams can help you identify vulnerabilities, quantify cyber risks as they relate to the deal and manage mitigation or remediation of cybersecurity in M&A.

Supply chain in M&A integration and divestments

Whether it’s an M&A integration or a divestment and separation, a transaction provides a unique opportunity to transform your supply chain. Learn more.

EY and EY-Parthenon can help you devise a strategy to realize your ambition: powered by technology, shaped by your portfolio and executed by transformation.

EY Strategy Edge: business intelligence platform

EY Strategy Edge is an AI-powered business intelligence platform generating actionable insights from advanced analysis of broad data sources. Learn more.

Buy and integrate: M&A advisory team

Elizabeth Kaske

Focused on mergers, acquisitions, divestitures and large-scale transformations. Mother, golfer, runner. Enjoys yoga, wakesurfing and global travel.

Brian Salsberg

Passionate acquisition and merger integration leader and aficionado of all things deal-related. Global citizen. World traveler. Husband. Father of two.

Mitch Berlin

Dedicated to finding and capturing the most value from every transaction. Passionate advocate for diversity and inclusiveness as the cornerstones of successful teams and businesses.

On the agenda (6)

Strategy and Transactions

Featured: How CEOs juggle transformation priorities – the art of taking back control

Strategy by EY-Parthenon

Featured: How GenAI strategy can transform innovation

Data and decision intelligence

Featured: The CIO Imperative: Is your technology moving fast enough to realize your ambitions?

Cybersecurity

Featured: Is your greatest risk the complexity of your cyber strategy?

Capital allocation services

Careers in Strategy and Transactions at EY

At EY, you’ll have the chance to build a career as unique as you are, with the global scale, support, inclusive culture and technology to become the best version of you. The exceptional EY experience. It’s yours to build.

• Students and entry-level

• Connect with us
• Our locations
• Do Not Sell or Share My Personal Information
• Legal and privacy
• Accessibility
• Open Facebook profile
• Open X profile
• Open LinkedIn profile
• Open Youtube profile

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

• Browse All Articles
• Newsletter Sign-Up

Acquisition →

• 20 Jun 2023
• Cold Call Podcast

Elon Musk’s Twitter Takeover: Lessons in Strategic Change

In late October 2022, Elon Musk officially took Twitter private and became the company’s majority shareholder, finally ending a months-long acquisition saga. He appointed himself CEO and brought in his own team to clean house. Musk needed to take decisive steps to succeed against the major opposition to his leadership from both inside and outside the company. Twitter employees circulated an open letter protesting expected layoffs, advertising agencies advised their clients to pause spending on Twitter, and EU officials considered a broader Twitter ban. What short-term actions should Musk take to stabilize the situation, and how should he approach long-term strategy to turn around Twitter? Harvard Business School assistant professor Andy Wu and co-author Goran Calic, associate professor at McMaster University’s DeGroote School of Business, discuss Twitter as a microcosm for the future of media and information in their case, “Twitter Turnaround and Elon Musk.”

• 29 Nov 2022
• Research & Ideas

Is There a Method to Musk’s Madness on Twitter?

Elon Musk's brash management style has upended the social media platform, but was bold action necessary to address serious problems? Andy Wu discusses the tech entrepreneur's takeover of Twitter.

• 13 Dec 2021

The Unlikely Upside of Mergers: More Diverse Management Teams

Mergers shake up the status quo at companies and help women and people of color move up the ladder. Research by Letian Zhang mines data from 37,000 deals. Open for comment; 0 Comments.

• 14 Jan 2021
• Working Paper Summaries

Dog Eat Dog: Measuring Network Effects Using a Digital Platform Merger

With heated debate over antitrust regulation of online platforms, this study finds that when a larger platform acquired its greatest competitor, users were not better off with a single platform compared with two competitors, despite marked efficiency improvements experienced by the acquiring platform.

• 30 Nov 2020

Short-Termism, Shareholder Payouts, and Investment in the EU

Shareholder-driven “short-termism,” as evidenced by increasing payouts to shareholders, is said to impede long-term investment in EU public firms. But a deep dive into the data reveals a different story.

• 26 Jun 2020

Weak Credit Covenants

Prior to the 2020 pandemic, the leveraged loan market experienced an unprecedented boom, which came hand in hand with significant changes in contracting terms. This study presents large-sample evidence of what constitutes contractual weakness from the creditors’ perspective.

• 13 Jan 2020

Do Private Equity Buyouts Get a Bad Rap?

Elizabeth Warren calls private equity buyouts "Wall Street looting," but a recent study by Josh Lerner and colleagues shows they have both positive and negative impacts. Open for comment; 0 Comments.

• 05 Nov 2019

The Economic Effects of Private Equity Buyouts

Private equity buyouts are a major financial enterprise that critics see as dominated by rent-seeking activities with little in the way of societal benefits. This study of 6,000 US buyouts between 1980 and 2013 finds that the real side effects of buyouts on target firms and their workers vary greatly by deal type and market conditions.

• 21 Aug 2019

Improving Customer Compatibility with Operational Transparency

Service firms seeking prospective customers usually highlight the advantages of their offerings and downplay the tradeoffs. This study suggests a different approach: Provide transparency into advantages as well as tradeoffs. The transparency helps customers make informed decisions and can lead to better outcomes for both firms and customers over the long run.

• 05 Jun 2019

If Your Customers Don't Care What You Charge, What Should You Charge?

Consumer inertia is the tendency of some customers to buy a product, even when superior options exist. Alexander J. MacKay discusses how that habit affects competitive strategy and even regulatory oversight. Open for comment; 0 Comments.

• 04 Jun 2019

Political Influence and Merger Antitrust Reviews

This paper uses a large sample of United States mergers between 1998 and 2010 to study how political connections help firms obtain favorable antitrust regulatory outcomes for mergers. Given that antitrust regulators are subject to congressional oversight, the authors predict and find evidence that outcomes systematically favor firms that are constituents of politicians serving on judiciary committees.

• 30 May 2019

US Antitrust Law and Policy in Historical Perspective

Since the late 19th century, American antitrust law and policy has responded to multiple changes: technological advances that have transformed business structures, political imperatives that have reformed regulations and informed prosecutorial discretion, and economic theories that have reshaped the boundaries of government interventions into the economy. Today, antitrust remains a contested field.

• 10 Apr 2019

Trade Secrets Protection and Antitakeover Provisions

The study examines managers’ responses when facing an increased threat of their firm being acquired. Results add to our knowledge of the use of antitakeover provisions, showing that managers, particularly in high-innovation firms, increase certain provisions to protect long-term innovation output in the presence of elevated acquisition risk.

• 14 May 2018

Amazon vs. Whole Foods: When Cultures Collide

Amazon's acquisition of Whole Foods seemed a Wall Street dream come true. But then Amazon's data-driven efficiency met the customer-driven culture at Whole Foods—and the shelves began to empty. Dennis Campbell and Tatiana Sandino discuss their new case study. Open for comment; 0 Comments.

• 12 Feb 2018

Private Equity, Jobs, and Productivity: Reply to Ayash and Rastad

In 2014, the authors published an influential analysis of private equity buyouts in the American Economic Review. Recently, economists Brian Ayash and Mahdi Rastad have challenged the accuracy of those findings. This new paper responds point by point to their critique, contending that it reflects a misunderstanding of the data and methodology behind the original study.

• 25 Jan 2016

When Negotiating a Price, Never Bid with a Round Number

Investors who offer “precise” bids for company shares yield better outcomes than those who offer round-number bids, according to research by Petri Hukkanen and Matti Keloharju. Open for comment; 0 Comments.

• 03 Sep 2009
• What Do You Think?

Are Retention Bonuses Worth the Investment?

There is a time and place for retention bonuses but they should be used sparingly, wrote many respondents to this month's column, says Professor Jim Heskett. Others challenged the value of bonuses, and suggested compelling alternatives. (Online forum now closed; next forum begins October 2.) Closed for comment; 0 Comments.

• 15 Dec 2008

The Surprisingly Successful Marriages of Multinationals and Social Brands

What happens when small iconic brands associated with social values—think Ben & Jerry's—are acquired by large concerns—think Unilever? Can the marriage of a virtuous mouse and a wealthy elephant work to the benefit of both? Professors James E. Austin and Herman B. "Dutch" Leonard discuss their research. Closed for comment; 0 Comments.

• 28 Nov 2005

Unilever: Transformation and Tradition

In a new book, professor Geoffrey Jones looks at Unilever's decades-old transformation from fragmented underperformer to focused consumer products giant. This epilogue summarizes the years 1960 to 1990. Closed for comment; 0 Comments.

• 02 Apr 2001

Not All M&As Are Alike—and That Matters

In this Harvard Business Review article, Professor Joseph L. Bower shares some of the results of his year-long study of M&A activity sponsored by HBS. Discover how five distinct merger and acquisition strategies scenarios play out—and his recommendations for success. Closed for comment; 0 Comments.

Mergers and Acquisitions (Online)

Strategize and execute successful deals.

Get Your Brochure

June 25, 2024

9 weeks, online 4-6 hours per week

PROGRAM FEE

US$3,700 and get US$370 off with a referral

For Your Team

Enroll your team and learn with your peers

Learn together with your colleagues

Participants report that enrolling in a program with colleagues fosters collaborative learning and amplifies their impact.

Please provide your details to get more information about the group-enrollment pricing.

The benefit of learning together with your friend is that you keep each other accountable and have meaningful discussions about what you're learning.

Congratulations!

Based on the information you provided, your team is eligible for a special discount, for Mergers and Acquisitions (Online) starting on June 25, 2024 .

We’ve sent you an email with enrollment next steps. If you’re ready to enroll now, click the button below.

Early Registration Benefit

Apply now to secure your place at US$3,293 by . Connect with a learning advisor for more information.

Achieve Growth with the Strategic Lever of Mergers and Acquisitions

Mergers and acquisitions (M&A) are on the rebound, driven by favorable economic conditions and the potential to accelerate digital transformation with technologies like GenAI. However, a historically uncertain landscape and the inherent risks of M&A require that deals be fully vetted and carefully planned. The nine-week Mergers and Acquisitions (Online) program from Columbia Business School Executive Education will help you navigate the complexities of the M&A process. Through live sessions with world-class faculty, case studies, assignments, and activities, you will learn a proven offensive and defensive framework and develop a comprehensive understanding of mergers and acquisitions, from strategy to execution.

Respondents listed valuation of assets as a challenge to M&A success.

SOURCE: DELOITTE HEADS OF M&A SURVEY

Business leaders expect to use M&A to accelerate the adoption of technology and technology-related processes.

SOURCE: PwC

M&A strategy is the single most important element in achieving a successful M&A deal.

SOURCE: Deloitte

Key takeaways.

The Mergers and Acquistions (Online) program will enable you to:

• Deep-dive into the M&A process from deal sourcing through transaction closing
• Analyze the strategic rationale for and against an M&A transaction
• Explore the role of valuation in the M&A process and examine different valuation methods and the math behind the deal
• Explain how to capture value through M&A and create synergies of revenue and cost
• Examine the best practices of due diligence, deal documentation, and transaction structuring in M&A transactions
• Evaluate the M&A process of a real-world merger and determine whether the parties involved derived the "benefit of the bargain"

Who Should Attend

This program is intended for those who have experience in corporate finance, capital markets, or investment management. It is highly recommended that participants have prior knowledge of topics such as discounted cash flow models; risk and return; capital asset pricing model; dividend policy; asset valuation; fixed income; and behavioral finance.

Senior executives who set the strategic course for growth and oversee the firm’s investment portfolio

Representative roles include:

• Chief Executive Officer
• Chief Operating Officer
• Chief Investment Officer
• Chief Financial Officer
• Consulting Director
• Corporate Vice President
• Director Of Financial Reporting/Financial Fervices/Regulatory
• Affairs/Risk Management

Mid-level managers who serve in finance or investment functions and play a key role in the financial matters of the organization

• Financial Analyst
• CPA/Accountant
• Investment Manager
• Acquisition/Equity Manager

Consultants, Legal Counsel, and Advisors who serve in a role of sourcing, executing, managing, or integrating M&A transactions, or who hold relationships with investment banks and private investors

• Management Consultant
• Investment Banker
• Financial Advisor
• Private Banker

Program Modules

Review the key terminology of the M&A landscape and learn a five-point framework for remaining disciplined during the M&A process.

Examine the six key topics to be addressed in the M&A process: strategic alternatives; screening candidates; valuation, synergies, and pro-forma analysis; interloper analysis; form of consideration; and tactical approach issues and Plan B.

Explore the role that valuation plays in the M&A process and evaluate whether an M&A transaction will add value.

Review the most common 'deal math' calculations for an M&A transaction including: premium; fully diluted shares outstanding (FDSO); transaction values; transaction multiples; transaction exchange ratio and pro forma ownership (only in stock deals) and contribution analysis (only in stock deals).

Explain the due diligence process–including financial, legal, and commercial–and its role in ensuring that both parties can protect their benefit of the bargain.

Describe the principles and mechanics of deal documentation and learn about various transaction structures, including direct mergers, triangular mergers, consolidations, and asset sales.

Discuss some key questions that both parties must address throughout the M&A process and some guidelines for friendly versus hostile deals. Gain insight into the roles of the involved stakeholders.

The final project brings together all of the concepts taught in this program and consists of two parts. Part one includes general questions about merger agreements, valuation, and due diligence. Part two relates specifically to the Kenneth Cole Productions case and includes reference documents (e.g., Schedule 14A) and presentations from the financial advisor.

Program Experience

World-Renowned Faculty

Learn from accomplished faculty, and industry experts whose diverse backgrounds encompass a broad range of disciplines

Peer Interaction

Stimulating discussions with like-minded global peers expand your professional network and build a supportive community

Through exploratory sessions, examine practical examples and find innovative solutions to strategic challenges

Live Faculty Sessions

Get actionable insights in live online interactions with faculty who are recognized leaders in their fields

Engaging Assignments and Activities

Hone business acumen and executive skills with try-it activities that help you redefine your potential

Past Participant Profile

Past participants of the Mergers and Acquisitions (Online) program come from diverse backgrounds, industries, and experiences.

Average years of work experience:

• Less than 10 years: 12%
• 10 to 14 years: 16%
• 15 to 19 years: 22%
• More than 20 years: 50%

Top industries:

• Entrepreneurship
• Finance and Insurance
• General Management

Top functions:

• Finance Accounting

Top countries:

• United States
• United Arab Emirates

Note: Data from across previous cohorts

Participant Testimonials

“The final exam and the KCP analysis had the highest impact to my learning because it gave me the opportunity to utilize and apply the program learnings from each module to a real-world setting.” — Raymond Pustinger, CEO, Armada Power

“The program gave a very comprehensive overview of the most relevant topics in public M&A deals. The valuation part was the best one.” — Paolo Scalzini, Senior Director Corporate Development - Global Team, JSR Life Sciences

“The program covered all the important angles and provided just the right level of detail to understand and support an M&A transaction.” — Jamal Mosallam, Chief Financial Officer, Simon Group Holdings

“Overall experience was excellent. Some of the aspects that I enjoyed are the video instructions, summary notes, office hours, and instructor webinars.” — George Dyche, Vice President Product Management, Industrial, Brady Corporation

Program Faculty

Donna M. Hitscherich

Senior lecturer, business, finance, and economics. co-director, private equity program, columbia business school.

Donna M. Hitscherich Senior Lecturer, Business, Finance, and Economics. Co-director, Private Equity Program, Columbia Business School At Columbia Business School, Donna Hitscherich serves as co-director of the Private Equity Program and is a Bernstein Faculty Leader at the Sanford C. Bernstein & Co. Center for Leadership and Ethics. She teaches Corporate Finance, Business Law, Mergers and Acquisitions, and Advanced Corporate Finance. Prior to her academic career, she was an investment banker and mergers and acquisition specialist, working with CS First Boston, JP Morgan & Co Inc., and Bank of America Securities. Prior to those roles, she was a corporate lawyer, specializing in mergers and acquisitions. She holds a BS and JD from St. John’s University and an MBA from Columbia Business School. Hitscherich is also a certified paramedic in the State of New York.

Certificate

Upon completion of the Mergers and Acquisitions (Online) program, you will receive a certificate of participation from Columbia Business School Executive Education. This certificate also awards two credits towards the Certificate in Business Excellence, which grants select alumni and tuition benefits. Learn More

Your digitally verified certificate will be issued in your legal name and emailed to you, at no additional cost, upon completion of the program, including all modules of the program (online, in person, or live online, inter-module). All certificate images are for illustrative purposes only and may be subject to change at the discretion of Columbia Business School Executive Education.

How do I know if this program is right for me?

After reviewing the information on the program landing page, we recommend you submit the short form above to gain access to the program brochure, which includes more in-depth information. If you still have questions on whether this program is a good fit for you, please email [email protected], and a dedicated program advisor will follow-up with you very shortly.

Are there any prerequisites for this program?

Some programs do have prerequisites, particularly the more technical ones. This information will be noted on the program landing page, as well as in the program brochure. If you are uncertain about program prerequisites and your capabilities, please email us at the ID mentioned above.

Note that, unless otherwise stated on the program web page, all programs are taught in English and proficiency in English is required.

What is the typical class profile?

More than 50 percent of our participants are from outside the United States. Class profiles vary from one cohort to the next, but, generally, our online certificates draw a highly diverse audience in terms of professional experience, industry, and geography — leading to a very rich peer learning and networking experience.

What other dates will this program be offered in the future?

Check back to this program web page or email us to inquire if future program dates or the timeline for future offerings have been confirmed yet.

How much time is required each week?

Each program includes an estimated learner effort per week. This is referenced at the top of the program landing page under the Duration section, as well as in the program brochure, which you can obtain by submitting the short form at the top of this web page.

How will my time be spent?

We have designed this program to fit into your current working life as efficiently as possible. Time will be spent among a variety of activities including:

• Engaging with recorded video lectures from faculty
• Attending webinars and office hours, as per the specific program schedule
• Reading or engaging with examples of core topics
• Completing knowledge checks/quizzes and required activities
• Engaging in moderated discussion groups with your peers
• Completing your final project, if required

The program is designed to be highly interactive while also allowing time for self-reflection and to demonstrate an understanding of the core topics through various active learning exercises. Please email us if you need further clarification on program activities.

What is it like to learn online with the learning collaborator, Emeritus?

More than 300,000 learners across 200 countries have chosen to advance their skills with Emeritus and its educational learning partners. In fact, 90 percent of the respondents of a recent survey across all our programs said that their learning outcomes were met or exceeded. All the contents of the course would be made available to students at the commencement of the course. However, to ensure the program delivers the desired learning outcomes the students may appoint Emeritus to manage the delivery of the program in a cohort-based manner the cost of which is already included in the overall course fee of the course. A dedicated program support team is available 24/5 (Monday to Friday) to answer questions about the learning platform, technical issues, or anything else that may affect your learning experience.

How do I interact with other program participants?

Peer learning adds substantially to the overall learning experience and is an important part of the program. You can connect and communicate with other participants through our learning platform.

What are the requirements to earn the certificate?

Each program includes an estimated learner effort per week, so you can gauge what will be required before you enroll. This is referenced at the top of the program landing page under the Duration section, as well as in the program brochure, which you can obtain by submitting the short form at the top of this web page. All programs are designed to fit into your working life. This program is scored as a pass or no-pass; participants must complete the required activities to pass and obtain the certificate of completion. Some programs include a final project submission or other assignments to obtain passing status. This information will be noted in the program brochure. Please email us if you need further clarification on any specific program requirements.

What type of certificate will I receive?

Upon successful completion of the program, you will receive a smart digital certificate. The smart digital certificate can be shared with friends, family, schools, or potential employers. You can use it on your cover letter, resume, and/or display it on your LinkedIn profile. The digital certificate will be sent approximately two weeks after the program, once grading is complete.

Can I get the hard copy of the certificate?

No, only verified digital certificates will be issued upon successful completion. This allows you to share your credentials on social platforms such as LinkedIn, Facebook, and Twitter.

Do I receive alumni status after completing this program?

No, there is no alumni status granted for this program. In some cases, there are credits that count toward a higher level of certification. This information will be clearly noted in the program brochure.

How long will I have access to the learning materials?

You will have access to the online learning platform and all the videos and program materials for 12 months following the program start date . Access to the learning platform is restricted to registered participants per the terms of agreement.

What equipment or technical requirements are there for this program?

Participants will need the latest version of their preferred browser to access the learning platform. In addition, Microsoft Office and a PDF viewer are required to access documents, spreadsheets, presentations, PDF files, and transcripts.

Do I need to be online to access the program content?

Yes, the learning platform is accessed via the internet, and video content is not available for download. However, you can download files of video transcripts, assignment templates, readings, etc. For maximum flexibility, you can access program content from a desktop, laptop, tablet, or mobile device. Video lectures must be streamed via the internet, and any livestream webinars and office hours will require an internet connection. However, these sessions are always recorded, so you may view them later.

Can I still register if the registration deadline has passed?

Yes, you can register up until seven days past the published start date of the program without missing any of the core program material or learnings.

What is the program fee, and what forms of payment do you accept?

The program fee is noted at the top of this program web page and usually referenced in the program brochure as well.

• Flexible payment options are available (see details below as well as at the top of this program web page next to FEE ).
• Tuition assistance is available for participants who qualify. Please email [email protected].

What if I don’t have a credit card? Is there another method of payment accepted?

Yes, you can do the bank remittance in the program currency via wire transfer or debit card. Please contact your program advisor, or email us for details.

I was not able to use the discount code provided. Can you help?

Yes! Please email us with the details of the program you are interested in, and we will assist you.

How can I obtain an invoice for payment?

Please email us your invoicing requirements and the specific program you’re interested in enrolling in.

Is there an option to make flexible payments for this program?

Yes, the flexible payment option allows a participant to pay the program fee in installments. This option is made available on the payment page and should be selected before submitting the payment.

How can I obtain a W9 form?

Please connect with us via email for assistance.

Who will be collecting the payment for the program?

Emeritus collects all program payments, provides learner enrollment and program support, and manages learning platform services.

What is the program refund and deferral policy?

For the program refund and deferral policy, please click the link here .

Didn't find what you were looking for? Write to us at [email protected] or Schedule a call with one of our Academic Advisors or call us at +1 315 387 4431 (US) / +44 203 838 0836 (UK) / +65 3138 4449 (SG)

Early registrations are encouraged. Seats fill up quickly!

Flexible payment options available. Learn more.

Mergers and Acquisitions Examples: The largest company M&A deals list

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

This post was originally published in August 2019 and has been updated for relevancy in May 2, 2024.

When it comes to mergers and acquisitions, bigger doesn’t always mean better - the examples we included in our list of the biggest M&A failures is evidence of that.

In fact, all things being equal, the bigger a deal becomes, the bigger the likelihood that the buyer is overpaying for the target company. But whether you like mega deals or not, we cannot afford to ignore them. 

At DealRoom, we help companies evolve and streamline multiple large and successful M&A deals each year. In this article, we collected some of the biggest deals in history.

Related: 11 Biggest M&A Deals of 2022 and 8 Biggest Upcoming M&A Deals in 2023 (so far)

Biggest mergers and acquisitions examples list.

Reading this list, it can seem that the biggest deals are doomed to failure (at least from the perspective of their shareholders). But thankfully, that just isn’t the case. Some of the biggest M&A transactions of the past 30 years have been outstanding successes.

Many of these deals have achieved what they set out to do at the outset - to reshape industries on the strength of a single deal.

With that in mind, let's take a closer look at 25 companies that recorded the largest mergers and acquisitions in history.

1. Vodafone and Mannesmann (1999) - $202.8B ($373B adjusted for inflation)

As of March 2024, the takeover of Mannesmann by Vodafone in 2000 was still one of the largest acquisitions ever made. Worth ~ $203 billion at that time, Vodafone, a mobile operator based in the United Kingdom, acquired Mannesmann, a German-owned industrial conglomerate company.

This deal made Vodafone the world’s largest mobile operator and set the scene for dozens of mega deals in the mobile telecommunications space in the years that followed. This deal is still considered as the biggest acquisition in history.

2. Shenhua Group and China Guodian Corporation (2017) - $278B ($354B adjusted for inflation)

The merger between Shenhua Group and China Guodian Corporation is the biggest example of a merger of equals that happened in 2017. Shenhua Group is China’s largest coal provider, while China Guodian Corporation is one of the top five electricity producers.

This $278 billion merger created the world’s largest power utility company by installed capacity. The goal of the merger was to create a balanced energy portfolio between coal power and renewable energy. This is to align with China’s broader environmental and economic objectives .

3. AOL and Time Warner (2000) - $182B ($325B adjusted for inflation)

When we mentioned at the outset of this article that ‘ big doesn’t always mean better ’, the famous merger of AOL, a U.S.-based internet service provider, and Time Warner, an American cable television company, in 2000 is a case in point. 

In little over two decades, the deal has become cemented as the textbook example of how not to conduct mergers and acquisitions. It featured everything from overpaying to strong cultural differences and even, with the benefit of hindsight, two large media companies who just weren’t sure where the media landscape was headed. 

The merger's valuation came crashing down after the dot-com bubble burst just two months after the deal was signed. The deal, which is to be known as the largest merger in history, fell apart in 2009, 9 years later after it was originally signed.

4. ChemChina and Sinochem (2018) - $245B ($309B adjusted for inflation)

The ChemChina and Sinochem merger was part of the Chinese government’s bigger plan to strengthen their competitiveness in the global stage by reducing the overall number of its state-owned enterprises through merging its biggest companies to create a larger firm.

This specific merger created the world’s largest industrial chemicals company, known as Sinochem Holdings, which surpassed major global competitors like BASF in North America in terms of scale and market presence.

5. Gaz de France and Suez (2007) - $182B ($259B adjusted for inflation)

France loves its national champions - the large French companies that compete on a world stage, waving the tricolor. It was no surprise then, when Nicholas Sarkozy, President of France in 2007, stepped in to save this merger.

That’s right - a President playing the role of part-time investment banker. These days, Suez is one of the oil and gas ‘majors’, although the fact that the company’s share price hovers very close to where it was a decade and a half ago tells us everything of what investors thought of the deal.

The deal, one of the biggest mergers ever in energy, created the world’s fourth largest energy company and Europe’s second largest electricity and gas group. The merged companies created a diversified, flexible energy supply stream with a high-performance electricity production base.

6. Glaxo Wellcome and SmithKline Beecham merger (2000) - $107B  ($197B adjusted for inflation)

The merger of the UK’s two largest pharmaceutical firms in 2000 led to what is currently the 6th largest pharmaceutical firm in the world, and the only British firm in the top 10.

However, like several deals on this list, it wasn’t received particularly well by investors and at the time of writing is trading at about 25% less than the time of the merger.

This, and a range of bolt-on acquisitions in the consumer space over the past decade, may explain why the company is planning to split into two separate companies in the coming years.

7. Verizon and Vodafone (2013) - $130B ($173B adjusted for inflation)

Vodafone has been involved in so many transactions over the past 20 years that they should be getting quite efficient at the process at this stage. The $130B deal in 2013 allowed Verizon to pay for its US wireless division.

At the time, the deal was the third largest in history - two of which Vodafone had partaken in. From Verizon’s perspective, it gave the company full control over its wireless division, ending an often fraught relationship with Vodafone that lasted for over a decade, and also allowed it to build new mobile networks and contend with an increasingly competitive landscape at the time.

From Vodafone's point of view, the acquisition cut the company value roughly in half, to $100 billion. The business acquisition also moved Vodafone from the second largest phone company in the world down to fourth, behind China Mobile, AT&T, and Verizon.

8. Dow Chemical and DuPont merger (2015) - $130B ($166B adjusted for inflation)

When Dow Chemical and DuPont announced they were merging in 2015, everyone sat up and took notice; the merger of equals would create the largest chemicals company by sales in the world, as well as eliminate the competition between them, making it a picture-perfect example of horizontal merger.

Shortly after the deal was completed, in 2018, the company was already generating revenue of $86B a year - but it didn’t last long: In 2019, management announced that the merged company would spin off into three separate companies, each with a separate focus.

9. United Technologies and Raytheon (2019) - $121B ($147B adjusted for inflation)

The merger between United Technologies Corporation (UTC) and Raytheon Company created Raytheon Technologies, an aerospace and defense giant. The new legal entity is expected to be the leader in aerospace and defense industries, with a broadened portfolio and enhanced market reach.

Now that the deal went through, Raytheon can leverage United Technologies' expertise in high temperature materials for jet engines; and in directed energy weapons, United Technologies has relevant power generation and management technology.

So far, however, investors seem less convinced with the company’s share price taking a dip of around 25% straight after the deal closed.

10. AB InBev and SABMiller merger (2015) - $107B  ($138B adjusted for inflation)

If stock price is any indication of whether a deal was successful or not, then the creation of AmBev through the merger of InBev and SABMiller in 2015 certainly wasn’t.

On paper, the deal looked good - two of the world’s biggest brewers bringing a host of the world’s favorite beers into one stable.

There was just one problem - they didn’t foresee the rise of craft beers and how it would disrupt the brewing industry. Several bolt-on acquisitions of craft brewers later and the new company may finally be on track again.

11. AT&T and Time Warner (2018) - $108B ($134B adjusted for inflation)

Not only did the proposed merger of AT&T and Time Warner draw criticism from antitrust regulators when it was announced, it also brought back memories of the previous time Time Warner had been involved in a megadeal.

With the best part of two decades to learn from its mistake, and AT&T a much bigger cash generator than AOL, this deal looks like it has been better thought through than the deal that preceded it.

12. Heinz and Kraft merger (2015) - $100B  ($131B adjusted for inflation)

The merger of Heinz and Kraft - to create the Kraft Heinz Company - is yet another megadeal that has a detrimental effect on stock.

The deal has been called a “ mega-mess ,” with billions knocked off the stock price since the deal closed. One of the reasons has been allegations made about accounting practices at the two firms before the merger.

Another reason has been zero-based budgeting (ZBB), a strict cost cutting regime that came at a time when old brands needed to be refreshed rather than have their budgets cut back.

13. BMO Financial Group and Bank of the West (2021) - $105B ($119.5B adjusted for inflation)

On December 20, 2021, BMO Financial Group announced the acquisition of BNP Paribas SA unit Bank of the West and its subsidiaries with assets worth approximately $105B. This merger is expected to significantly expand BMO’s presence in the U.S.

Through this acquisition, BMO can expand their customer base, increase their market presence in new regions, and enhance their existing capabilities with complementary products and services offered by Bank of the West.

14. Bristol-Myers Squibb and Celgene merger (2019) - $95B  ($115B adjusted for inflation)

Despite the massive size of the transaction, this 2019 megadeal wasn’t a “merger of equals.” Instead, Celgene became a subsidiary of Bristol-Myers Squibb. The deal brings together two of the world’s largest cancer drug manufacturers, so hopefully the deal amounts to something much greater than the sum of the parts.

15. Energy Transfer Equity and Energy Transfer Partners (2018) - $90B  ($111B adjusted for inflation)

This deal is part of a strategic initiative to simplify Energy Transfer Equity’s corporate structure and streamlining their operations.​

Each ETP unit was converted into 1.28 ETE units, resulting in a major redistribution of shares but keeping the business essentially continuous under a new name. 

ETE was renamed Energy Transfer LP and began trading under the ticker symbol "ET" on the New York Stock Exchange. On the other hand, ETP was renamed Energy Transfer Operating L.P.

16. Unilever plc and Unilever N.V. (2020) - $81B  ($97B adjusted for inflation)

The M&A deal between Unilever plc and Unilever N.V. in 2020 was essentially a unification strategy. The primary goal was to create a more cohesive organization with streamlined operations and increased strategic flexibility. 

During this process, they made sure nothing will change in their operations, locations, activities or staffing levels in either The Netherlands or the United Kingdom.

17. Walt Disney and 21st Century Fox (2017) - $52.4B ($83.7B adjusted for inflation)

In December 2017, The Walt Disney Company acquired 21st Century Fox. Walt Disney’s goal was to boost their global presence and content diversity, adding to its strong franchise and streaming service portfolio. This acquisition enhanced Disney’s entertainment library and direct-to-consumer streaming offerings, bringing franchises like X-Men and Deadpool under one roof.

18. Bayer and Monsanto (2018) - $63B ($78B adjusted for inflation)

The deal between Bayer and Monsanto worth approximately $63B created one of the world's biggest agrochemical and agricultural biotechnology corporations. Bayer was known widely for its pharmaceutical division, but it also has a substantial crop science division, where they offer chemical and crop protection. 

Through the Monsanto acquisition, Bayer has strengthened their agricultural business using Monsanto’s expertise, which ultimately made them a global leader in seeds, traits, and agricultural chemicals.

After the completion of the deal in 2018, the integration has been complex due to the legacy issues inherited from the acquisition of Monsanto, such as culture, reputation, and legal and regulatory issues.

19. Microsoft and Activision Blizzard (2023) - $75.4B ($76.5B adjusted for inflation)

On January 18, 2022, Microsoft announced its intent to acquire Activision Blizzard, initially valued at $68.7B. The goal of this strategic acquisition was to significantly boost its gaming segment across various platforms including mobile, PC, console, and cloud. 

Microsoft can do this by integrating Activision Blizzard's strong portfolio of popular gaming franchises like Call of Duty, World of Warcraft, and Candy Crush. After overcoming numerous regulatory challenges, the deal was finalized on October 13, 2023. 

This acquisition, with the total cost amounting to $75.4 billion, represents one of the largest deals in the video game industry.

20. Broadcom and VMWare (2023) - $61B ($62B adjusted for inflation)

In November 2023, Broadcom acquired VMWare to strengthen its infrastructure software business by integrating VMWare’s extensive multi-cloud services capabilities. 

Due to the large scale of both companies’ operations, the deal had to go through a massive regulatory scrutiny and review. It involved multiple jurisdictions across the globe to assess its impact on competition and market dynamics within the tech industry.

21. Exxon Mobil and Pioneer Natural Resources (2023) - $59.5B ($60B adjusted for inflation)

As part of their strategy to enhance their production capabilities and market presence in the oil and gas industry, Exxon Mobil merged with Pioneer Natural Resources. 

They announced this deal in October 2023, with the goal to achieve a partnership that would combine their strengths in terms of resources and strengthen their portfolio in the global energy market. 

ExxonMobil’s Senior Vice President, Niel Chapman, reaffirms that the deal is still on track and is set to close in the second quarter of 2024.

22. S&P Global and IHS Markit (2020) - $44B ($52.8B adjusted for inflation)

S&P Global announced an all-stock merger with IHS Markit worth $44 billion in November 2020. Through this deal, S&P Global will gain access to a data provider that supplies financial information to 50,000 customers across business and governments. Both companies expected a generated annual free cash flow of exceeding $5bn by 2023.

23. Discovery, Inc. and WarnerMedia (2022) - $43B ($46B adjusted for inflation)

On April 8, 2022, Discovery Inc. and WarnerMedia finalized a merger that would enhance their global media and entertainment footprint. The goal was to combine Warnermedia’s extensive entertainment assets with Discovery's non-fiction and international entertainment.

This $43B deal formed a new entity called Warner Bros. Discovery, which now has a vast portfolio that includes networks such as CNN, HBO, and Discovery Channel, as well as streaming services like HBO Max and Discovery+.

This horizontal merger boosted the newly formed company to compete with other major players like Netflix and Disney+ by providing a richer diversity of content across genres.

24. Pfizer and Seagen (2023) - $43B ($43.7B adjusted for inflation)

Pfizer’s acquisition of Seagen for $43B in March 2023 marked one of the largest deals in the biopharmaceutical sector since 2019.

Since Seagen is a biotech company known for its expertise in developing antibody-drug conjugates (ADCs) and other innovative cancer therapies, this acquisition will strengthen Pfizer’s oncology portfolio and expand their presence in the cancer treatment market.

25. Altimeter and Grab Holdings (2021) - $40B ($46.7B adjusted for inflation)

Altimeter’s stock-for-stock merger with Grab Holdings marked as the largest de-SPAC transaction at that time, worth approximately $40B. 

Instead of a traditional IPO process, Altimeter helped Grab go public through a reverse merger. The primary motive of the deal was to boost Grab's dominance in Southeast Asia by providing them with additional capital to propel their expansion and face their fierce competition, particularly Gojek.

It's a win-win move for Altimeter because the merger carved an opportunity for them to invest in a fast-growing tech company with a solid market presence in a rapidly developing region.

Merger examples

A merger is a transaction of two companies, usually of similar size, mutually agreeing to combine their businesses into one entity. 

This is distinct from an acquisition , where one company (the buyer) buys the outstanding shares of a target company, and the target company’s shareholders receive the proceeds from selling those shares.

Here are a few examples of mergers that have happened in the M&A landscape:

Exxon Mobil and Pioneer Natural Resources (2023) - $59.5B ($60B adjusted for inflation)

This is a great example of a merger of equals where no payment was made from one company to another. This was an all-stock transaction, where Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing.

United Technologies and Raytheon (2019) - $121B ($147B adjusted for inflation)

Another classic example of a so-called “ merger of equals .” The United Technologies and Raytheon merger is also an all-stock transaction, where Raytheon shareholders receive shares in the new company, while UTC shareholders maintain a majority stake.

Discovery, Inc. and WarnerMedia (2022) - $43B ($46B adjusted for inflation)

Despite the first two examples mentioned above, not all mergers involve two equal-sized companies. When AT&T owned WarnerMedia, they merged it with a smaller company, Discovery Inc. This special kind of deal is called a Reverse Morris Trust. So even though it's a merger, AT&T got $40.4 billion in cash as a payment. 

This payment was part of the deal to help balance things out between what AT&T was giving up and what they were getting in return. AT&T shareholders also ended up owning a big part of the combined company.

Acquisition example

An acquisition is a transaction whereby companies, organizations, and/or their assets are acquired for some consideration by another company. The motive for one company to acquire another is nearly always growth. 

In the next section, let’s take a look at great acquisitions examples that have happened in M&A history.

Microsoft and Activision Blizzard (2022) - $75.4B ($76.5B adjusted for inflation)

This is an example of an outright acquisition. In December 2021, Blizzard faced allegations and a lawsuit regarding workplace misconduct, specifically discrimination against women employees. Their reputation and business operations were taking a hit, and they wanted an out. 

Meanwhile Microsoft wanted Activision's iconic franchises like “Call of Duty” and “World of Warcraft” to increase their presence in the gaming industry. Activision saw Microsoft’s acquisition as a way to address internal issues under new leadership, while Microsoft potentially expanding its footprint in the gaming industry.

Walt Disney and 21st Century Fox (2017) - $52.4B ($83.7B adjusted for inflation)

Another classic example of an acquisition is the Walt Disney and 21st Century Fox deal. During this time, the media landscape was rapidly changing and traditional media companies like 21st Century Fox were facing significant competition from new digital entrants like Netflix and Amazon. Fox wanted to sell their company to focus on their core strengths, primarily news and sports. 

On the other hand, Walt Disney had better content creation and distribution, which allowed them to benefit from this transaction.

Amazon and Whole Foods (2017) - $13.7B ($17B adjusted for inflation)

Though this deal did not make our top 25, it’s certainly a great example of a successful acquisition. Amazon bought Whole Foods in 2017 for approximately $13.7B to have greater control of their supply chain and broaden their reach into new markets. 

Before this deal, Amazon was more focused on e-commerce. This strategic move allowed them to expand into the brick-and-mortar grocery sector, through Whole Foods. Amazon was able to integrate its e-commerce capabilities with Whole Foods' physical store network and achieved economies of scale in several areas, especially in distribution and logistics.

Lessons from successful and failed mergers and acquisitions 

Whether it’s a success or failure, there are always lessons to be learned in the world of mergers & acquisitions. Here are some of the best lessons we want to emphasize and share.

Don’t overlook culture 

In the past, culture was one of the most underrated aspects of M&A. No one cared about it, and deal makers were only focused on the numbers and synergies. Today, practitioners are catching on, and they tend to focus more on culture during due diligence. But for those who are still not believers, you can always look up the Daimler Benz and Chrysler deal back on May 7, 1998. 

Daimler was aggressive during integration and Chrysler didn’t want to be told what to do. They didn’t get along and continued to run as separate operations. The entire deal was a disaster, which eventually led to Daimler Benz selling Chrysler to the Cerberus Capital Management firm.

Don’t take due diligence for granted

M&A teams must never take due diligence for granted and turn every possible stone. One mistake can cause massive headaches, and potentially destroy the acquiring company.  HP learned this the hard way when they acquired Autonomy back in 2011. The plan was to transform HP from a computer and printer maker into a software-focused enterprise services firm. 

The problem came after the deal was closed, and HP discovered that Autonomy was cooking the books by selling hardware at a loss to its customers while booking the sales as software licensing revenue. This is one of the most controversial deals of all time, generating massive lawsuits due to fraudulent accounting practices.

Plan for integration early in the process

The biggest mistake any practitioner could make is not planning for integration early in the M&A process . Integration is where value is created, and must be prioritized during due diligence. 

The Sprint and Nextel Communications deal back in 2005 is a great example of the importance of integration planning. The combination of these two legal entities created the third largest telecommunications provider at that time. The goal is to gain access to each other's customer bases and cross sell their product lines. 

However due to the lack of integration planning during the diligence they were not prepared for what was about to come after closing. Apparently the two companies' networks did not share the same technology and had zero overlap making integration extremely difficult. They also lost a significant amount of market share due to their clashing marketing strategies that allowed rivals to steal dissatisfied customers.

Final thoughts

Overall, it’s hard to argue which deal in US history is the most successful merger or acquisition due to the fact that sometimes the full value and potential of a deal takes years to formulate.

However, the top mergers and acquisitions take into account best practices such as robust communication, focus on the strategic goal/deal thesis, and early integration planning throughout the deal lifecycle.

Much can be learned from companies that have successfully merged with or acquired other companies.

The right technology and tools can also work to make deals more successful. DealRoom’s M&A project management software and tools aims to help teams manage their complex M&A transactions.

Whether teams need deal management software, due diligence process assistance, help with their post merger (PMI) process, or just a simple VDR, our platform provides the necessary technology and features to streamline M&A processes.

Get the latest M&A tips & news delivered straight to your inbox

Get your m&a process in order. use dealroom as a single source of truth and align your team..

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

The Case for M&A in a Downturn

• Brian Salsberg

Companies that made significant acquisitions during the financial crisis outperformed those who didn’t.

As companies begin planning for a post-Covid future, there may be opportunities to make one or more long-sought acquisitions. Deal premiums are likely to come down and assets that companies had been reluctant to sell may become available. But the window for maximizing value could be relatively short, if history is any indication. An analysis of evidence from the global financial crisis shows that companies that made significant acquisitions outperformed those that did not. Companies considering an M&A will need to consider some of the unique aspects to getting a deal done, from transaction diligence to post-acquisition integration.

In these difficult times, we’ve made a number of our coronavirus articles free for all readers. To get all of HBR’s content delivered to your inbox, sign up for the Daily Alert newsletter.

Most companies are still in the early days of assessing the impact from the Covid-19 crisis on their business. But as they begin planning for the future, there may be opportunities to make one or more long-sought acquisitions.

• Brian Salsberg is the EY Global Buy and Integrate Leader. In this role, he leads fully-integrated M&A management services across sectors for the EY organization. He has experience working directly with CEOs, executives, business teams and boards of directors, as well as PE-backed companies, in all facets of strategic planning, due diligence, corporate development and M&A.

Partner Center

Mastering M&A: Your Ultimate Guide for Understanding Mergers and Acquisitions

• May 6, 2024

Table of Contents

The process of two companies or their major business assets consolidating together is known as M&A ( mergers and acquisitions ). It is a business strategy involving two or more companies merging to form a single entity or one company acquiring another. The reasons for mergers and acquisitions transactions are entirely on the basis of strategic objectives like market growth, expanding the company’s market share, cost optimisation, and the like.

What are Mergers & Acquisitions

M&As are also an essential component of investment banking capital markets. It helps in revenue generation, shaping market dynamics, and more. This article will provide a profound understanding of mergers and acquisitions including the roles and responsibilities in the M&A process , types, processes, and various other nitty-gritty involved in the investment banking fundamentals relevant to this business strategy. 

Types of Mergers and Acquisitions  

There are many types associated with the mergers and acquisitions strategy. These are:

Horizontal Mergers 

The merger or consolidation of businesses between firms from one industry is known as a horizontal merger. This occurs when competition is high among companies operating in the same domain. Horizontal mergers help companies gain a higher ground due to potential gains in market share and synergies. Investment banking firms have a major role to play in identifying potential partners for this type of merger. 

Vertical Mergers 

A vertical merger occurs between two or more companies offering different supply chain functions for a particular type of goods or service. This form of merger takes place to enhance the production and cost efficiency of companies specialising in different domains of the supply chain industry. Investment banking firms help in the evaluation of said synergies to optimise overall operational efficiency.

Conglomerate Mergers 

A conglomerate merger occurs when one corporation merges with another corporation operating in an entirely different industry and market space. The very term ‘conglomerate’ is used to describe a company related to several different businesses. 

Friendly vs. Hostile Takeovers 

Hostile takeover.

A hostile takeover is a nonconsensual merger that occurs when one corporation attempts to acquire another without the agreement of the board of directors from the target corporation.

Friendly Takeover

A friendly takeover is a consensual merger that occurs because of the agreement between the board of directors of two corporations. 

Leveraged Buyouts (LBOs) 

A leveraged buyout occurs when a company is purchased via two transactional forms, namely, equity and debt. The funds of this purchase are usually supported by the existing or in-hand capital of a company, the buyer’s purchase of the new equity and funds borrowed. 

Investment banking services are majorly relied upon throughout the entire process encompassing a leveraged buyout. Investment banking skills are necessary for supporting both sides during a bid in order to raise capital and or decide the appropriate valuation. 

Mergers and Acquisitions Process 

To succeed in investment banking careers, your foundational knowledge in handling mergers and acquisitions (M&A) should be strong. Guiding clients throughout the processes involved in M&A transactions, including roles and responsibilities in the M&A process, is one of the core investment banking skills.

Preparing for Mergers and Acquisitions

To build a strong acquisition strategy, you need to understand the specific benefits the acquirer aims to gain from the acquisition. It can include expanding product lines or entering new markets.

Target Identification and Screening

The acquirer defines the requirements involved in identifying target companies. They may include criteria like profit margins, location, or target customer base. They use these criteria to search for and evaluate potential targets.

Due Diligence

The due diligence process begins after accepting an offer. A comprehensive examination is conducted wherein all aspects of the target company's operations are analysed. They may include financial metrics, assets and liabilities, customers, and the like. Confirming or adjusting the acquirer's assessment of the target company's valuation is the main goal.

Valuation Methods

Assuming positive initial discussions, the acquirer requests detailed information from the target company, such as current financials, to further evaluate its suitability as an acquisition target and as a standalone business.

Negotiating Deal Terms

After creating several valuation models, the acquirer should have enough information to make a reasonable offer. Once the initial offer is presented, both companies can negotiate the terms of the deal in more detail.

Financing M&A Transactions

Upon completing due diligence without significant issues, the next step is to finalise the sale contract. The parties decide on the type of purchase agreement, whether it involves buying assets or shares. While financing options are usually explored earlier, the specific details of financing are typically sorted out after signing the purchase and sale agreement.

Post-Merger Integration

Once the acquisition deal is closed, the management teams of the acquiring and target companies cooperate together to merge the two firms and further implement their operations.

Taking up professional investment banking courses can help you get easy access to investment banking internships that will give you the required industry-level skills you need to flourish in this field. 

Financial Analysis   

Financial statements analysis  .

Financial statement analysis of mergers and acquisitions involves evaluating the financial statements of both the acquiring and target companies to assess the financial impact and potential benefits of the transaction. It may include statements like the income statement, balance sheet, and cash flow statement. It is conducted to assess the overall financial health and performance of the company.

In investment banking, financial modelling is a crucial tool used in the financial statement analysis of mergers and acquisitions (M&A). Investment bankers develop a merger model, which is a comprehensive financial model that projects the combined financial statements of the acquiring and target companies post-merger. 

Cash Flow Analysis  

Examining a company's cash inflows and outflows to assess its ability to generate and manage cash effectively. In investment banking jobs, one of the primary roles is to assess the transaction structure, including the consideration paid and the timing of cash flows. 

Ratio Analysis  

Utilising various financial ratios to interpret and analyse a company's financial performance, efficiency, and risk levels. Investment banking training equips professionals with a deep understanding of various financial ratios and their significance. They learn how to calculate and interpret ratios related to profitability, liquidity, solvency, efficiency, and valuation.

Comparable Company Analysis  

Comparable Company Analysis (CCA) plays a crucial role in mergers and acquisitions (M&As) due to its importance in determining the valuation of the target company. In investment banking training, you will learn how to conduct a CCA and identify a group of comparable companies in the same industry as the target company. 

By comparing the target company's financial metrics to its peers, you can identify the company's strengths, weaknesses, and positioning within the industry and provide appropriate guidance.

Discounted Cash Flow (DCF) Analysis

Discounted Cash Flow (DCF) analysis is a crucial valuation technique used in Mergers And Acquisitions . It helps determine the intrinsic value of a company. It helps project the potential cash flows of a company in the future. DCF analysis involves factors like revenue growth, operation costs, working capital requirements and the like.  

Investment banking training provides the skills in building complex financial models that are required for DCF analysis. They develop comprehensive models that incorporate projected cash flows, discount rates, and terminal values to estimate the present value of a company.

Merger Consequences Analysis

Merger Consequences Analysis helps assess the potential outcomes and impact on financial performance, operations, and value of the entities partaking in the M&A. Investment bankers conduct an extensive evaluation to identify and quantify potential synergies that may result from the merger or acquisition, encompassing cost savings, revenue growth opportunities, operational efficiencies, and strategic advantages. 

This analysis aids in estimating the financial implications of these synergies on the combined entity.

Legal and Regulatory Considerations

If you are pursuing an investment banking career, knowledge of the various legalities involved in M&As will help you nail any investment banking interview. The regulatory legalities involved in the process of Mergers And Acquisitions that partaking entities and investment banking services need to consider:-

Antitrust Laws and Regulations

Antitrust laws and regulations aim to foster fair competition and prevent anti-competitive practices. In the context of Mergers And Acquisitions , it is vital to assess whether the combination of the acquiring and target companies could potentially harm competition significantly. 

Complying with antitrust laws may involve seeking clearance from regulatory bodies or implementing remedies to address any potential anti-competitive concerns.

Securities Laws and Regulations

Securities laws and regulations are of utmost importance in M&A transactions, considering the issuance of securities or transfer of ownership interests. Compliance with these laws governs the disclosure of material information, fair treatment of shareholders, and the filing of requisite documents with regulatory entities.

Regulatory Approvals and Filings

M&A transactions often necessitate obtaining approvals from various regulatory bodies, including government agencies, industry regulators, or competition authorities. These approvals ensure adherence to specific industry regulations and are typically indispensable for proceeding with the transaction. 

Additionally, filings and disclosures like Form S-4 or 8-K, may be mandatory for furnishing relevant information about the transaction to legal authorities.

Confidentiality and Non-Disclosure Agreements

Confidentiality is crucial throughout M&A transactions. To safeguard sensitive information and trade secrets, parties involved usually enter into non-disclosure agreements (NDAs). These NDAs outline the terms and conditions governing the sharing and handling of confidential information throughout the entire transaction process.

M&A Documentation

The following M&A documents are instrumental in organising and formalising the holistic M&A process. They give clarity, safeguard the interests of all parties included, and guarantee compliance with pertinent legal and regulatory prerequisites all through the transferring process.

Letter of Intent (LOI)  

The Letter of Intent (LOI) is the first and most urgent document that frames the agreements proposed in Mergers And Acquisitions . It fills in as the commencement for exchanges and conversations among the gatherings participating in the business procedure.

Merger Agreement  

The Merger Agreement is a legally approved contract that covers every detail of the merger. It may include crucial information like the price of purchase, terms of payment, warranties, post-closure commitments and representations. This arrangement formalises the responsibilities between the partaking parties.

Share Purchase Agreement  

The Share Purchase Agreement is a legally binding contract that oversees the assets of the target organisation being acquired. It frames the terms, conditions, and legitimate liabilities connected with the exchange of ownership interests.

Asset Purchase Agreement  

An Asset Purchase Agreement is utilised when particular assets of the target organisation are being gained. It is a legal contract that sets out the regulatory commitments attached to the procurement and division of those assets.

Confidentiality Agreements  

Confidentiality Agreements, also known as Non-Disclosure Agreements (NDAs), play a major role in protecting sensitive data collected during the Mergers And Acquisitions cycle. They lay out rules and commitments to guarantee the safe handling and non-exposure of restrictive proprietary information and secrets.

Due Diligence Checklist  

The Due Diligence Checklist is a broad list that helps direct the assessment process by framing the important documents, data, and areas to be evaluated. It works with an exhaustive and deliberate evaluation of the objective organisation's monetary, legal, functional, and business viewpoints.

M&A Case Studies   

M&A case studies serve as a hub of knowledge, enabling companies to make informed decisions and avoid common pitfalls. By delving into these real-world examples, organisations can shape their Mergers And Acquisitions strategies, anticipate challenges, and increase the likelihood of successful outcomes. 

Some of these case studies may include:- 

Successful M&A Transactions  

Real-life examples and case studies of M&A transactions that have achieved remarkable success provide meaningful insights into the factors that contributed to their positive outcomes. By analysing these successful deals, companies can uncover valuable lessons and understand the strategic alignment, effective integration processes, synergies realised, and the resulting post-merger performance. 

These case studies serve as an inspiration and offer practical knowledge for companies embarking on their own Mergers And Acquisitions journeys.

Failed M&A Transactions  

It's equally important to learn from M&A transactions that did not meet expectations or faced challenges. These case studies shed light on the reasons behind their failure. We can examine the cultural clashes, integration issues, financial setbacks, or insufficient due diligence that led to unfavorable outcomes. 

By evaluating failed M&A deals, companies can gain valuable insights so they can further avoid the pitfalls and consider the critical factors to build a successful M&A strategy.

Lessons Learned from M&A Deals  

By analysing a wide range of M&A transactions, including both successful and unsuccessful ones, we can distill valuable lessons. These case studies help us identify recurring themes, best practices, and key takeaways. 

They provide an in-depth and comprehensive understanding of what are mergers & acquisitions , the various pitfalls and potential opportunities involved in an M&A that can enhance their decision-making processes to develop effective strategies.

Taking up reliable investment banking courses can be instrumental in taking your career to unimaginable heights in this field. 

M&A Strategies and Best Practices   

By implementing the following M&A strategies, companies can enhance the likelihood of a successful merger or acquisition:

Strategic Fit and Synergies  

One of the key aspects of Mergers And Acquisitions is ensuring strategic fit between the acquiring and target companies. This involves evaluating alignment in terms of business goals, market positioning, product portfolios, and customer base.

Integration Planning and Execution  

A well-balanced integration plan is crucial for a successful Mergers And Acquisitions . It encompasses creating a roadmap for integrating the acquired company's operations, systems, processes, and people. 

Effective execution of the integration plan requires careful coordination, clear communication, and strong project management to ensure a seamless transition and minimise disruption.

Cultural Integration  

Merging organisations often have different cultures, values, and ways of doing business. Cultural integration is essential to aligning employees, fostering collaboration, and maintaining morale. Proactively managing cultural differences, promoting open communication, and creating a shared vision can help mitigate integration challenges and create a cohesive post-merger organisation.

Managing Stakeholders  

Mergers And Acquisitions transactions involve multiple stakeholders, including employees, customers, suppliers, investors, and regulatory bodies. Managing their expectations, addressing concerns, and communicating the strategic rationale and benefits of the deal are all crucial. 

Engaging with stakeholders throughout the process helps build trust and support, ensuring a smoother transition and post-merger success.

Risk Management in Mergers and Acquisitions   

M&A transactions involve inherent risks that need to be effectively managed. Conducting comprehensive due diligence, identifying and assessing potential risks, and developing risk mitigation strategies are essential steps. 

It's important to consider legal and regulatory compliance, financial risks, operational challenges, cultural integration issues, and potential resistance from stakeholders.

Post-Merger Performance Evaluation  

Evaluating the performance of the merged entity post-transaction is critical to assessing the success of the deal and identifying areas for improvement. This involves tracking financial performance, measuring synergies realised, monitoring customer and employee satisfaction, and conducting periodic assessments. 

Continuous evaluation helps refine strategies and ensure the realisation of intended benefits.

Conclusion 

Mergers and acquisitions (M&A) are intricate processes that require in-depth knowledge and expertise in investment banking operations. The components discussed, such as reasons for mergers and acquisitions , M&A documentation, case studies, and strategies, emphasise the importance of comprehensive analysis, due diligence, and risk management. 

Many students tend to pursue investment banking careers because of the comparatively high investment banking salary involved. If you are one of these enthusiasts, pursuing a Certified Investment Banking Operations Professional course from Imarticus can provide you with the investment banking certification you need to get started. 

This course helps you develop the specialised skills and knowledge required for a successful career in investment banking. It covers essential topics related to M&A, financial analysis, valuation methods, and regulatory considerations, equipping learners with the necessary tools to navigate the complexities of M&A transactions.

Share This Post

Subscribe to our newsletter, get updates and learn from the best, do you want to boost your career, drop us a message and keep in touch.

Keep In Touch

Mergers and Acquisitions: Structuring and Leading Deals

PROGRAM DATES: May 13-17, 2024

PROGRAM FEE: $15,750

Mergers and Acquisitions: Structuring and Leading Deals is an immersive program designed to provide participants with an overview of the M&A process through multiple lenses.

Mergers and Acquisitions: Structuring and Leading Deals provides participants with an overview of the M&A process through multiple lenses including strategic, financial, legal, and operational. The program is designed to provide participants with in-depth analysis of the components of mergers and acquisitions. Participants will explore:

• How M&A can be a core component of firm strategy
• How targets and synergies are valued
• How M&A transactions are sourced, initiated, and priced
• How deals are structured and designed
• What kinds of disputes and potential lawsuits arise over the course of an M&A transaction
• How targets are integrated after the deal is formally complete

Mergers and Acquisitions: Structuring and Leading Deals is aimed at those with responsibility for managing, overseeing, and implementing M&A transactions. The focus will be transactions in major markets such as the U.S. and the U.K., but the course will also cover aspects of cross-border mergers and acquisitions. Participants do not need to have a background in mergers and acquisitions and the course will add value to those with previous mergers and acquisitions experience.

About the Mergers and Acquisitions program

The program aims to prepare you to:

• Identify key stages of a deal, critical decisions in each stage, and the major legal and other constraints on those decisions.
• Create strategies to mitigate risks and leverage opportunities to successfully navigate each stage of deal.
• Identify the motives for and parameters of a range of deal types, including large and small, domestic and cross-border, public and private target, friendly and hostile, whole company and partial acquisitions.
• Understand the M&A process from different perspectives including strategy, finance, negotiations, law, tax, and operations to better steer your organization (and/or clients) through future deals.

The Learning Model

Case studies, lectures, classroom discussions, and small group discussions ensure that techniques and strategies are memorable and implementable. Case studies on law firms and other professional service firms give participants exposure to real-world issues and help them work through possible approaches and solutions to the problems that professional service firm leaders confront. Participants practice making decisions about challenging real-life management problems in professional service settings.

This program will explore the following concepts through the lens of M&A:

• Strategy – When to do a deal and how to assess if a deal is good
• Courtship – Who to partner with and what elements to include in NDAs, Letters of Intent, and other contracts
• Finance – Identifying the financial implications of a deal
• Legal Negotiation – Having discussions centered around structure, tax, anti-trust, and regulation
• Negotiation – Executing and completing the deal
• Integration – How to work between the two entities once the deal is complete

Unlike most other M&A executive education programs, this program will provide a comprehensive look at the process including both the business and legal aspects of mergers and acquisitions. Participants in this program should be positioned within their organization to advise on or oversee M&A deals. In particular, individuals who are new to that role, taking on greater responsibility, or who need a more well-rounded understanding of M&A and its effects on their organization or client, will benefit from this program. Applicants to the program are not required to have a J.D., LL.B., or equivalent.

Past participants for this program have included:

• In-house lawyers and others who oversee M&A transactions for large companies and private equity firms
• Lawyers in investment banks, accounting firms, and consulting firms who need to understand the M&A process as part of the services they provide.
• Partners at law firms that handle aspects of M&A and wish to obtain more complete view of other aspects of M&A transactions.
• Mid-senior level business professionals who must understand the M&A process for their work in fields such as private equity, venture capital, investment banking, consulting, accounting, and tax planning.
• Business leaders who advise/decide on the acquisition of other businesses within their company.

This program is open to participants from around the world. Participants do not need to have a background in mergers and acquisitions and the course will add value to those with previous mergers and acquisitions experience.

Visit the  Admissions page  for information on the process.

Our core faculty are members of the Harvard Law School faculty – distinguished academicians, educators, researchers, authors, and practitioners in their respective fields. Representing various disciplines, they are close to practice through relationships with law firm leaders and through personal involvement as consultants for top firms around the world.

Teaching Team

John Coates IV, Harvard Law School – Faculty Chair

Elisabeth de Fontenay, Duke University School of Law

Bala Dharan, Harvard Law School

Benjamin C. Esty, Harvard Business School

Scott Mayfield, Harvard Business School

Chancellor Kathaleen St. J. McCormick, Delaware Courts

Hillary Sale, Georgetown Law

You may also be interested in:

Leadership in Law Firms →

Women’s Leadership Initiative →

Modal Gallery

Gallery block modal gallery.

TCLA - The Corporate Law Academy

Mergers and acquisitions case studies and interviews | a guide for future lawyers.

Jaysen Sutton -

18 min read

Share on social:

 mergers and acquisitions case studies and interviews, a guide for future lawyers.

Enjoyed this post? Check out our new Mergers and Acquisitions Course , which covers exactly what you need to know about M&A for interviews at top commercial law firms. Free access to this course is given to all premium subscribers .

If you don’t know what commercial law is or what commercial lawyers do, it’s hard to know whether you want to be one.

I’m going to discuss one aspect of commercial law: mergers and acquisitions or “M&A”, and with any luck, convince you it can be exciting.

I’ll also cover many of the aspects of mergers and acquisitions that you need to know for law firm interviews and case study exercises.

Let’s begin with an example, which highlights the impact of mergers and acquisitions. In 2017, Amazon bought Whole Foods and became the fifth largest grocer in the US by market share. This single manoeuvre shed almost $40 billion in market value from companies in the US and Europe .

The fall in value of rival supermarkets reflected fears over Amazon’s financial capacity and its potential to win a price war between supermarkets. Amazon the customer data to understand where, when and why people buy groceries, and it has the technology to integrate its offline and online platforms. When you’re in the race to be the first trillion-dollar company, acquisitions can take you a long way ( Edit: In August 2018, Apple managed to beat Amazon to win this title ).

But not all companies share Amazon’s success. In fact, out of 2,500 M&A deals analysed by the Harvard Business Review, 60% destroyed shareholder value .

That begs the question:

[divider height=”30″ style=”default” line=”default” themecolor=”1″]

Why do firms merge or acquire in the first place?

I’ll use law firms as an example. You’ll have seen that they often merge, or adopt structures called Swiss vereins, which allow law firms to share branding and marketing but keep their finances and legal liabilities separate.

In the legal world, it can be hard to find organic growth or organic growth can be very slow. Clients like to shop around, which can make it hard to retain existing business. It’s competitive: other law firms can poach valuable partners and bring their clients with them. And whilst entering new markets is an attractive option, it’s expensive, often subject to heavy-regulation and requires the resolve and means to challenge the existing players in that market.

Consolidation can help law firms, which are squeezed between lower-cost entrants and the global players, to compete. This is why we’ve seen many mergers in the mid-market. A combined firm is bigger, less vulnerable to external shocks, and has access to more lawyers and clients. The three-way merger between Olswang, Nabarro and CMS is a good example of this. The year before its merger, Olswang had revenues below £100m and a 77% fall in operating profit. Now, under the name CMS, it’s one of the largest UK law firms by lawyer headcount and revenue.

But mergers aren’t only a defensive move. They can allow law firms to speed-up entry into new markets. For example, were it not for its merger, it would have been difficult for Dentons to open an office in China. Chinese clients, especially state-owned enterprises, are often less likely to pay high legal fees, while local expertise and personal relationships can play a bigger role. There’s also regulation, which prevents non-Chinese lawyers from practicing Chinese mainland law, and plenty of competition from established Chinese law firms. That helps to explain Dentons’ 2015 merger with Dacheng, a firm with decades of experience and an established presence in the Chinese market. Now Dentons is positioned to serve clients investing in China, as well as Chinese clients looking for outbound work at a fraction of the time and cost.

Mergers can also synergies, or at least that’s one of the most frequently used buzzwords to justify an M&A deal. The idea is that when you combine two firms together, the value of the combined firm is more than the sum of its individual parts.

Synergies for a law firm merger could come from cutting costs by closing duplicate offices and laying off support staff. It could also be the fact that a combined law firm could sell more legal services than the two law firms individually, which may be bolstered by the fact that they can cross-sell their expertise to each other’s clients and benefit from economies of scale (e.g. better negotiating paper due to their size).

Finally, mergers can offer reputational benefits. Branding is an essential part of the legal world and combinations gain a lot of legal press. Mergers may allow fairly unknown firms to access new clients and generate far more business if they partner with an established firm. Very large global firms often pride themselves as a ‘one-stop shop’, pitching the fact that their size allows them to service all the needs of a client across any jurisdiction.

While it’s true that Swiss vereins have led the likes of DLA Piper and Baker McKenzie to develop very strong brands, collaboration hasn’t always worked out and some law firms have paid the ultimate price. Internal problems and mismanagement plagued the merger of Dewey & LeBoeuf , which, at the time, was called the largest law firm collapse in US history. Bingham McCutchen collapsed for similar reasons. Most recently, King & Wood Mallesons made the mistake of merging with an already troubled SJ Berwin. Poor incentive structures, defections and a fragile merger structure later led to the collapse of KWM Europe. Only time will tell whether Dentons’ 31 plus combinations, as well as the aggressive use of Swiss vereins by other firms, will be a success.

So that’s the why, I’ll now go through the how. Note, in this article, I’ll discuss the mechanics of acquisitions rather than mergers: you can see the difference in the definitions section below. As lawyers, you’ll find acquisitions are more common and you’re more likely to be asked about the acquisition process in law firm interviews and assessment centres.

Mergers & Acquisitions Definitions

• Acquisition : The purchase of one company by another company.
• Acquirer / Buyer : The company purchasing the target company.
• Asset purchase : The purchase of particular assets and liabilities in a target company. An alternative to a share purchase.
• Auction sale : The process where a company is put up for auction and multiple buyers bid to buy a target company.
• Due diligence : The process of investigating a business to determine whether it’s worth buying and on what terms it should be bought.
• Debt finance : This means raising finance through borrowing money.
• Equity finance : This means raising finance by issuing shares.
• Mergers : When two companies combine to form a new company.
• Share purchase : When a company buys another company through the purchase of its shares. An alternative to an asset purchase.
• Swiss verein : In the law firm context, this is a structure used by some law firms to ‘merge’ with other law firms. They share marketing and branding, but remain legally and financially separate.
• Target company : The company that is being acquired.

Kicking off the Acquisition Process

The buy side.

Sometimes the acquirer will have identified a company it wants to buy before it reaches out to advisers. Other times, it’ll work closely with an investment bank or a financial adviser to find a suitable target company.

Before making contact with the target company, the acquirer will typically undertake preliminary research, often with the help of third-party services to compile reports on companies. They’ll look through a range of material including:

• news sources and press releases
• insolvency and litigation databases
• filings at Companies House
• the industry and competitors

The aim is to better understand the target company. The company’s management will want to check for any big risks and form an early view of the viability of an acquisition. Then, if they’re convinced, the first contact may be direct or arranged through a third party, such as an investment bank or consultant.

Note: In practice, lawyers – especially trainees – spend a lot of time using the sources above. Companies House is a useful online resource to find out about private companies. It’s where you’ll find their annual accounts, annual returns (now called a confirmation statement) and information on the company’s incorporation.

The sell side

Sometimes, a target company wants to sell. The founders may want to retire, the company may be performing poorly, or investors may want to cash out and move on.

If a target company wants more options, it may initiate an auction sale. This is a competitive bid process, which tends to drive bid prices up and help the target company sell on the best terms possible. For example, Unilever sold its recent spreads business to KKR using this method.

But, an auction sale isn’t always appropriate. Sometimes the target company will enter discussions with just one company. This may be preferable if the company is struggling, so it can ensure speed and privacy, or the target company may have a particular acquirer in mind. For example, Whole Foods used a consultant to arrange a meeting with Amazon . That was after reading a media report which suggested Amazon was interested in buying the company.

Friendly v Hostile Takeovers

In the UK, takeovers are often used to refer to public companies. While we’ll be focusing on acquisitions of private companies, I’ll cover this here because they’re often in the news and sometimes come up in law firm interviews.

The board of directors are the people that oversee a company’s strategy. Directors owe duties to shareholders –  the owners of the company – and are appointed by the shareholders to manage a company’s affairs.

If a proposed acquisition is brought to the attention of the board and the board recommends the bid to shareholders, we call this a friendly takeover. But if they don’t, it’s a hostile takeover, and the acquirer will try to buy the company without the cooperation of management. This may mean presenting the offer directly to shareholders and trying to get a majority to agree to sell their shares.

Sometimes, it’s not too difficult; Cadbury’s board first rejected Kraft’s bid and accused the company of attempting to buy Cadbury “on the cheap”. Later, when Kraft revised its offer, the board recommended its bid to shareholders.

In other situations, hostile takeovers can be messy, especially if neither party wants to back down. This was the case in 2011 between the infamous activist investor Carl Icahn and The Clorox Company.

Icahn and the Clorox Company

In 2011, Carl Icahn made a bid to buy The Clorox Company (Clorox), the owner of many consumer products including Burt’s Bees. In his letter to the board, Icahn also tried to start a bidding war, inviting other buyers to step in and bid.

Clorox’s board rejected Icahn’s bid and quickly hired Wachtell, Lipton, Rosen & Katz, a US law firm, to defend itself. Wachtell wasn’t just any law firm. Icahn and Wachtell had been rivals for decades. In fact, between 2008 and 2011, Wachtell had successfully defended two companies from Icahn.

This was round three.

Clorox adopted a “poison pill” strategy, a tactic that allowed Clorox’s existing shareholders to buy the company’s shares at a discount. This made the attempted takeover more expensive. Martin Lipton, one of the founding partners of Wachtell, had invented the poison pill to prevent hostile takeovers in the 80’s. It was “one of the most anti-shareholder provisions ever devised” according to Icahn. Now, Clorox was using this weapon to stop the activist investor.

But that didn’t stop Icahn. In a scathing letter to the board , he raised his bid for the company.  A week later, the board rejected it again.

Icahn made a third bid. This time his letter threatened to remove the entire board. But the board didn’t back down.

Eventually, Icahn did.

The war between Icahn and Wachtell didn’t stop there. In 2013, Wachtell successfully defended Dell from Icahn. A few months after that, Icahn tried to sue Wachtell. In response, the law firm said:

“ Icahn takes his bullying campaign to a new level, seeking to intimidate lawyers who help clients resist his demands by making wild allegations and threatening liability. Those tactics will not work here .”

Remember when I said corporate law could be exciting?

What are the ways a company can acquire another company?

This is one of the most common questions in law firm commercial interviews.

There are two ways to acquire a company. A company can buy the shares of a target company in a share purchase or buy particular assets (and liabilities) in an asset purchase.

[one_second]

[/one_second]

Share Purchase

In a share purchase, the acquirer buys a majority of shares in the target company and therefore becomes its new owner . This means all of the company’s assets and liabilities transfer automatically, so, usually, there’s no need to worry about securing consent from third parties or transferring contracts separately. This is great because the business can continue without disruption and the transition is fairly seamless.

However, as the liabilities of a company also transfer in share purchase, it’s important the acquirer investigates the target really well. It’ll also want to try protect itself from known risks when negotiating the acquisition agreement.

For example, suppose three months after the acquisition has completed, a former employee brings an unfair dismissal claim against the acquirer. If this was something they had known about pre-acquisition, they’ll want to be indemnified for those costs (we’ll come back to this later).

Conversely, if they didn’t know about it at the time of the acquisition and they didn’t protect themselves in the acquisition agreement, they’ll have to pay out. That’s one of the risks of doing a share purchase. (Although as we’ll discuss later, there are certain things you can do to reduce the risks of this happening.)

Asset Purchase

We call this an asset purchase . It means that the acquirer identifies the specific assets and liabilities it wants to buy from the target and leaves everything else behind. That’s great because the acquirer will know exactly what it’s getting and there’s little risk of hidden liabilities.

However, asset purchases are less common and can be difficult to execute. Unlike share purchases, assets don’t transfer automatically, so the acquirer may have to renegotiate contracts or seek consent from third parties to proceed with the acquisition.

Preliminary Agreements

Confidentiality agreements.

Before negotiations begin, the target company will want the acquirer to sign a confidentiality agreement or a non-disclosure agreement.

This is important because the seller will provide the acquirer with access to private information during the due diligence process. Suppose the acquirer decided not to proceed with the acquisition and there was no confidentiality agreement in place; the acquirer could use this information to poach staff, better compete with the target or reveal damaging information to the public.

So, lawyers for the acquirer and the target company will negotiate the confidentiality agreement. They’ll decide what counts as confidential, what happens to information if the acquisition doesn’t complete, as well as any instances where confidential information can be passed on without breaching the contract.

Exclusivity Agreements

If an acquirer is dead set on buying a particular target company then, in an ideal situation, it will want to be the only one negotiating with that company. This would give the acquirer time to conduct due diligence and negotiate on price, without pressure from competitors. It also ensures secrecy.

If the acquirer has some bargaining power, it may try to sign an exclusivity agreement with the target company. This would ensure, for a period of time, the target company does not discuss the acquisition with third parties or seek out other offers.

While it’s unclear whether an exclusivity agreement was actually signed, Amazon was clear during early negotiations with Whole Foods that it wasn’t interested in a “multiparty sale process ” and warned it would walk if rumours started circulating. That was effective: Whole Foods chose not to entertain the four private equity firms who’d expressed interest in buying the company.

Heads of Terms

The first serious step will be the negotiation of the Heads of Terms (also called the Letter of Intent) between the lawyers, on behalf of the parties. This document details the main commercial and legal terms that have been agreed between the parties, including the structure of the deal, the price, the conditions for signing and the date of completion. It’s not legally binding – so the acquirer won’t have to buy and the target company won’t have to sell if the deal doesn’t go through – but it serves as a record of early negotiations and a guideline for the main acquisition document.

Due Diligence

An acquirer can’t determine whether it should buy a target without detailed information about its legal, financial and commercial position. The process of investigating, verifying and reviewing this information is called due diligence.

The due diligence process helps the acquirer to value the target. It’s an attempt at better understanding the target company, quantifying synergies and determining whether an acquisition makes financial sense.

Due diligence also reveals the risks of an acquisition. The acquirer can examine potential liabilities, from customer complaints to litigation claims or scandals. This is important because underlying the process of due diligence is the principle of  caveat emptor , which means “let the buyer beware”. This legal principle means it’s up to the buyer to fully investigate the company before entering into an agreement. In other words, if the buyer failed to discover something during due diligence, it’s their problem. There’s no remedy after the acquisition agreement is signed.

So if the problems uncovered during the due diligence process are substantial, the acquirer may decide to walk away. Alternatively, it could use this information to negotiate down the price or include terms to protect itself in the main acquisition document.

In an asset purchase, due diligence is also an opportunity to identify all the consents and approvals the buyer needs to acquire the company.

Due Diligence Teams

The acquirer will assemble a team of advisers, including bankers, accountants and lawyers, to manage the due diligence process. The form and scope of the review will depend on the nature of the acquisition. For example, an experienced private equity firm is likely to need less guidance than a start-up’s first acquisition. Likewise, a full due diligence process may not be appropriate for a struggling company that needs to be sold quickly.

Due diligence isn’t cheap, but missing information can be devastating. In a Merger Market  survey , 88% of respondents said insufficient due diligence was the most common reason M&A deals failed. HP had to write off $8.8 billion after its acquisition of Autonomy – which was criticised for being a result of HP’s ‘ faulty due  diligence ‘. Few also looked into organisational compatibility in the merger between AOL and Time Warner, which led to the “ biggest mistake in corporate history ”, according to Jeff Bewkes, chief executive of Time Warner. In 2000, Time Warner had a market value of $160 billion. In 2009, it was worth $36 billion.

Types of Due Diligence

Financial due diligence  This involves assessing the target company’s finances to determine its health and future performance.

Business due diligence  This involves evaluating strategic and commercial issues, including the market, competitors, customers and the target company’s strategy.

Legal Due Diligence

Legal due diligence is the process of assessing the legal risks of an acquisition. By understanding the legal risks of an acquisition, the acquirer can determine whether to proceed and on what terms.

The acquirer’s lawyers have a few ways of obtaining information for their due diligence report. They’ll prepare a questionnaire for the seller to complete and request a variety of documents. This will all be stored in a virtual ‘data room’ for all parties to access. They may also undertake company, insolvency, intellectual property and property searches, interview management and, if appropriate, undertake on-site visits.

Law firms tend to have a system to manage the flow of information and trainees are often very involved. They’ll review, under supervision, much of the documentation and flag up potential risks.

Legal due diligence reports are typically on an ‘exceptions’ basis. This means they’ll flag to the client only the material issues. You can see why this is valuable to the client; rather than raising every possible issue, they’ll apply their commercial judgement to inform the clients about the most important issues.

The report will propose recommendations on how to handle each identified issue. This may include: reducing the price, including a term in the agreement or seeking requests for more information. If the issue is significant, lawyers will want to tell their client immediately, especially if what they find is very serious.

Note, due diligence is a popular topic for interviews. You may be asked to recommend possible solutions to issues uncovered during the due diligence process or asked to discuss the issues that different departments may consider (see examples below).

What are lawyers looking for during due diligence?

What might corporate investigate.

The group structure of the target, including the operations of any parent companies or subsidiaries

The company’s constitution, board resolutions, director appointments and resignations, and shareholder agreements.

Important details from Insolvency and Companies House searches

Copies of contracts for suppliers, distributors, licences, agencies and customers.

Termination or notification provisions in contracts

What do they want to know?

Whether shareholders can transfer their shares (share purchase)

Whether shareholders need to approve the sale and the various voting powers of shareholders

Any change of control provisions in contracts

Whether the target can transfer assets (asset purchase)

Any outstanding director loans, director disqualifications, or conflicts of interest

What might Finance investigate?

Existing borrowing arrangements including loan documents and any guarantees

Correspondence with lenders and creditors

Share capital, allocation and employee share schemes

Assets and financial accounts

The company’s ability to pay current and future debts

Any prior loan defaults, credit issues or court judgements

Details of ownership and title to the assets

Any liabilities which could limit the performance of the target

Whether borrowing would breach existing loan terms

Whether the loan agreements have any change of control clauses

Whether security has been granted over the target’s assets to lenders

What might Litigation investigate?

Details of any past, current or pending litigation

Disputes between the company, employees or directors

Regulatory and compliance certificates

Any judgements made against the company

Insurance policies

The risk of outstanding or future claims against the company

Details of any regulatory or compliance investigations

Potential issues or threatened litigation from customers, employees or suppliers in the past five years

What might Property investigate?

Documents relating to freehold and leasehold interests

Inspections, site visits, surveyors and search reports

Health and safety certificates and building regulation compliance

Leases and licences granted to third parties

Whether the property will be used or sold

Property liabilities

Title ownership and lease/licensing terms

The value of the properties

Details of regulatory compliance

What might Employment investigate?

Director and employee details, and service contracts

Pension schemes and employee share schemes

Pay, benefits and HR policy information

Information in relation to redundancies, dismissals or litigation

Plans to retain key managers, redundancy and compensation

Pension scheme deficits

Termination or change of control provisions

Compliance with employment law and consultation

Risks of dismissal claims

Evaluate post-acquisition integration

What might Intellectual Property investigate?

List of any trademarks, copyright, patents, domain names and any other registered intellectual property

Registration documents and licencing agreements

Litigation and related correspondence

Searches at the Intellectual Property Office

Current or potential disputes, claims of threatened litigation in relation to infringement

Whether the seller has renewed trademarks

Who has ownership of the intellectual property

Whether they can transfer licenses and gain consents

Details of critical assets, confidentiality provisions and trade secrets

[/one_second] [divider height=”30″ style=”default” line=”default” themecolor=”1″]

The Acquisition Agreement

The main legal document is the sale and purchase agreement or “SPA”. It sets out what the acquirer is buying, the purchase price and the key terms of the transaction.

Purchase Price

A company will usually pay for an acquisition in cash, shares, or a combination of the two.

Cash is a good option if an acquirer is confident in the acquisition. If it believes the shares are going to increase in value (thanks to synergies), paying in cash means it can soak up the benefits without having to give up ownership of the company. It is, however, expensive to pay in cash. The buyer must raise money if it doesn’t already have enough cash reserves by issuing shares or borrowing.  Most sellers also want cash. It means they’ll know exactly how much they’re getting and don’t have to worry about the future performance of a company.

Other times, an acquirer will want to use shares to pay for an acquisition. The target’s shareholders will get a stake in the acquirer in return for selling their shares. If the value of the acquirer’s shares increases, the shareholders may get a better return. Often, this option will be more attractive for an acquirer as it doesn’t use up cash. Receiving shares can also be valuable for the seller if they’re gaining shares in a promising company. Conversely, however, they must bear the risk that the value of the acquirer falls.

Key terms of the transaction

Both parties will make assurances to each other in the form of terms in the SPA. These terms are heavily negotiated between lawyers.

Warranties and representations

Warranties are statements of fact about the state of the target company or particular assets or liabilities. For example, the seller may warrant that the target isn’t involved in any litigation, that its accounts are up to date and that there are no issues with its properties. If these warranties turn out to be false, the acquirer may claim for damages. However, there are limitations: the acquirer will have to show that the breach reduced the value of the business and that can be hard to prove.

During negotiations, the seller will try to limit the scope of the warranties. It’ll also prepare a disclosure letter to qualify each warranty. For example, the seller may qualify the above warranty with a list of outstanding litigation claims. If the seller discloses against a warranty, they won’t be liable for a breach. Disclosure is also useful for the acquirer because it may reveal information that was not found during due diligence.

The acquirer will want some of these statements to be representations. Representations are statements which induce the acquirer to enter into a contract. If these are false, the acquirer could have a claim for misrepresentation. That could give the acquirer a stronger remedy, including termination of the contract or a bigger claim for damages. This is why the seller will usually resist giving representations.

Indemnities

Indemnities are promises to compensate a party for identified costs or losses. This is appropriate because the acquirer may identify potential risks during due diligence; for example, the risk of an unfair dismissal claim or a litigation suit. The acquirer can seek indemnities to be compensated for these particular liabilities arising in the future. This is a way to allocate risks to the seller: if the event occurs the acquirer will be reimbursed by the seller.

Conditions Precedent

The SPA may be signed subject to the satisfaction of the conditions precedent or “CPs”. These are conditions that must be fulfilled before the acquisition can complete. That could mean, for example, securing consent from third parties, shareholder approval or merger clearance. Trainees are often responsible for keeping track of the conditions precedent checklist, and they’ll need to chase parties for the approvals to ensure all conditions are satisfied.[divider height=”30″ style=”default” line=”default” themecolor=”1″]

Signing and Completion

This is the big day. Signing can take place in person or virtually. Each party will return the SPA with their signature in accordance with the relevant guidelines. It’ll be the trainees responsibility to check that the SPA has been signed correctly and to collate the documents.

Final Thoughts

If you’re reading this to prepare for an interview, I’d suggest you explore the “acquisition structure”, “legal due diligence” and “warranties and indemnities” sections – these are common case-study questions. We cover this in more detail and with practice interview answers in our mergers and acquisitions course, which is free for TCLA Premium members.

[blog_teaser title=”” title_tag=”h3″ category=”” category_multi=”” margin=”1″]

• support@tcla.zendesk.com
• +44 (0) 753 854 5095
• Privacy Policy
• Terms and Conditions
• TCLA Newsletter

Follow us on social

© 2024 The Corporate Law Academy. All Rights Reserved.

Website by 438

Privacy Overview

More From Forbes

In the mergers and acquisitions world, culture is king.

• Share to Facebook
• Share to Twitter
• Share to Linkedin

Javier Evans is the Chief Human Resources Officer of Webster Bank , a leading commercial bank in the Northeast.

In mergers and acquisitions, a seamless transition to a combined company is the ultimate goal. While executives need to be focused on many of the critical facets of a merger—a combined technology platform, retaining talent, client needs and meeting shareholder expectations—they shouldn't lose sight of the backbone of the company, their culture. According to McKinsey , synergy efforts improve by about half if culture is a well-managed priority. So, it's clear that the underpinning of how stakeholders view a merger’s success begins with a strong, resilient culture.

The Keys To A Successful Post-Merger Culture

During a merger, it’s important to weave together the best of each entity and mold a culture that's organic and authentic. The management teams must work together to align the new organization’s culture with a common language and guiding behaviors that reflect their collaborative visions and missions.

Based on our recent experience at Webster Bank of bringing together two leading regional banks, here is a set of guiding principles to create an even higher-performing, more agile and innovative company during a merger.

Focus On Culture At The Outset

Culture is the foundation for uniting two unique workforces, so fostering it should begin during the integration phase. Historically, the norm has been for one company’s culture to prevail, but best practice is to develop a new integrated set of values to act as the combined company’s guiding principles. Developing and aligning core values is critical in helping all colleagues navigate the behaviors and expectations.

Google Chrome Gets Third Emergency Update In A Week As Attacks Continue

Japanese fans are puzzled that yasuke is in assassin s creed shadows, forbes releases 2024 30 under 30 asia list.

Leadership must decide how to become a combined entity with a singular approach to cultural norms. Allowing the combining entities to retain important aspects of their workplace cultures while embracing new qualities that make the new organization stronger and more cohesive is critical for success.

Have Executive Leadership's Support

Culture concepts need to be infused early, starting with the buy-in and support of the executive leadership team and modeled throughout the organization. Respecting and heeding culture needs to be a top priority for everyone.

Celebrate The Nuances

Even as merging entities form their unique environment, their legacy cultures can't be dismissed. History has meaning to colleagues, and pride in accomplishments represents more than nostalgia. It’s human nature to cling to and miss the past, even as our worlds evolve. That's why it's important to share and discuss how each entity's stories will be preserved and blended while you create a new vision of the future.

Get to know the nuances of each company’s legacy culture with deep-dive discussions with colleagues from all levels across the organization. This will help highlight and emphasize similarities. Harmonization is critical, with an eye for empathy, respect and sensitivity to the cultures of each team.

Get Your Culture Messaging Right

Once executives agree on the new company's narrative, it's important to strengthen it with messaging that resonates with everyone. Here are some strategies for making sure you use words that matter.

• Be Clear And Concise: Brief, to-the-point communications are paramount to implementing a “One Company, One Culture” philosophy across the organization. This ensures employees can digest the message quickly and easily.

• Conduct Culture Trainings: A comprehensive, immersive training program can help facilitate the transformation and align colleagues on the new organization's common purpose and values. This will generate a sense of inclusivity and belonging.

• Join Together: Create opportunities to bring people together. Don't underestimate the power of in-person culture assimilation meetings. Bringing people together pleases those excited by change, reassures those who are resistant and can be an incredible tool for understanding new co-workers.

• Prepare For Pushback: Not all employees will buy into the new culture, and that’s okay. Knowing how to handle these differences is what will differentiate a successful culture from a failed one.

• Get Feedback: Measuring the impact of this new culture shift through follow-up surveys can provide meaningful insights. For example, you can determine whether your messaging and actions are creating understanding of the company’s new values, desired culture and behaviors. Continue to monitor for informal feedback and adapt as the company evolves.

Culture is core to a successful organization. Developing and sustaining a program where employees actively embrace core values and culture will ensure an engaged workforce, stronger performance and future growth and prosperity.

Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?

• Editorial Standards
• Reprints & Permissions