Mergers and acquisitions

It is a perennial question in every major industry: What distinguishes the companies with a track record of M&A success? We think we’ve found the answer — and a few companies have figured it out, too. It’s a business strategy that uses capabilities as the basis for inorganic growth.

Successful acquirers make M&A deals that either enhance their distinctive capabilities systems, leverage those capabilities systems, or do both. Capabilities thus need to be an integral part of M&A. They play an important role at different steps in the process, from inorganic growth strategy, to due diligence and post-merger integration.

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PwC’s Strategy& research confirms these findings. After studying the largest transactions across a number of industries, we found that deals made with a capabilities perspective produce annual returns a full 14 percentage points higher than acquisitions with limited capabilities fit. Even during the difficult years since the 2008 economic crisis, deals linked to a capabilities-driven strategy have tended to increase shareholder value for the acquiring company – while most other inorganic moves have led to a loss of value.
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Gerald Adolph and Paul Leinwand in conversation: What role do capabilities play in successful mergers and acquisitions?
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Paul Leinwand, co-author of The Essential Advantage, in conversation with Tracy Byrnes from FoxNews about what companies need to do in order to turn M&A into a successful component of their growth strategy.

Key publications

Deals That Win
Twelve years of data shows that mergers and acquisitions that apply or enhance capabilities produce superior returns.
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A new study of inorganic growth shows that deals made to enhance or leverage the things that companies do well consistently outperform others.
Will You Be Mine In the Digital World?
As digital deals increase, acquirers are faced with challenges that digital M&A present at every phase. strategy+business examines the main types of digital deals, the common challenges associated with them and ways to avoid or overcome them.
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Mergers and acquisitions are becoming more critical — and more perilous — than ever. You can build your capabilities, even in the midst of turmoil.
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When you are selling part of your company, don’t just offer buyers a potential asset; give them the capabilities to gain value from it.
Breaking up is hard to do
Company executives have become quite good at releasing trapped value through the divestiture of noncore businesses, but they often overlook the significant value that can be had by correctly separating corporate functions shared by the parent and spin-off companies.
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We believe that the deals most worth doing are the ones that will help you better do what you already do well.

Further publications

Mergercast by Strategy&