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Study: Frequent, Consistent Acquisitions Produce Results

Compiled By Traci Purdum Slow and steady wins the merger-and-acquisition race, according to a recent study by Bain & Co., a global business-consulting firm. The study, which analyzed over 10,000 mergers and acquisitions in the U.S., Europe and Japan from 1986 to 2001, found that frequent and consistent deals through boom and bust times make a difference in the success of a company. For example, in the U.S. the study found that the more deals a company made, the more value it delivered to shareholders. The frequent buyer group, 15% of the participating firms, outperformed the inactive firms by a factor of 2-to-1. Although the current recession has many companies fighting for life, the study suggests that companies that make M&A a core competency will provide better returns for shareholders. Bain & Co. offers these suggestions:

  • Get in the game. If you are doing few or no deals, your odds of outperforming go down relative to your competitors that buy steadily.
  • Start small. Cut your teeth on smaller, lower risk deals. The study found that firms that focused on small deals outperformed those that made big bets by a factor of almost six.
  • Create an all-star team. Get an experienced deal team involved on all acquisitions, allowing them to proactively create opportunities.
  • Create a playbook. Buying companies should never be an ad-hoc process. Devise clear guidelines for the purchase and integration of acquired companies.
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