Mergers & Acquisitions Integration Handbook, 2nd Edition

CHAPTER 3Making the Business Case for Integration

In this chapter, you will learn:

• The business drivers of M&A activity
• Why M&A can be so difficult
• Making the business case for integration support
• The challenges of integration
• Integration success factors

Getting a merger or acquisition completed can take months if not years. It can be an all-consuming endeavor that can test the resources and stamina of management teams and the consultants and financial advisors involved as part of the process. And it can be expensive—not only the acquisition costs but the time, effort, and legal and financial due diligence costs necessary to complete the deal.

Typically, M&A activity is driven by the desire to accomplish some or all the goals discussed throughout this chapter.

THE BUSINESS DRIVERS OF M&A ACTIVITY

Companies use M&A to improve financial performance and shareholder value.

At the root of most M&A rationales is the need to achieve specific strategic objectives, which cannot be fully secured via just organic growth. Organic growth refers to expansion through increased sales, customer base, or internal improvements. Inorganic growth is often associated with M&A, where growth must be achieved via mergers, acquisitions, or strategic alliances.

Sometimes the M&A strategy may be a defensive one, where companies merge mainly to defend a competitive position and/or market.

The following are some supporting business benefits typically considered to improve financial performance.

Synergies ...