M&A can be rapidly implemented, and its benefits are quickly seen, whereas organic growth can often be slower, unproven, and requires significant time/costs. M&A is often centred upon strategic rationale by an acquirer based upon multiple factors, such as:

  • Accessing new customers, geographies or market segments;
  • Accessing new distribution channels;
  • Accessing new products or services;
  • [Accessing knowledge including human capital, technology and/or IP (intellectual property);
  • Unlocking synergies from the combined scale strengthening market position and/or providing cross-selling opportunities;
  • Preventative to stop a competitor from acquiring an asset or business

An example of some acquisition rationale can be seen below:

Rationale Objectives Critical Success Factors
Financial ·       Cost reduction and tighter financial control, an opportunity to dispose of underperforming businesses or departments


·       Imposition of management

·       Improved financial reporting requirements

·       Speed of change

Geographical ·       Expand the core business into new geographical locations ·       Clear understanding of deal rationale

·       Similarities to the target company

·       Ability to reward appropriate behaviour

Symbiotic ·       Integrate skills and products within a portfolio or distribution channel ·       Careful planning

·       New organisational structures

·       Culture management

·       Effective synergies




Absorption (continued)

·       Merge two similar businesses and absorb the target into the current business whilst reviewing efficiencies, the value of the two businesses combined is larger than they are individually ·       Financial efficiency objectives

·       Understanding similarities and differences between the target and acquirer

·       Swift appointment of an integration team and implementation of an integration plan

·       Choice of a management

·       New organisational and reporting structure

·       Internal and external communication



  • A lack of due diligence – without a thorough due diligence process risks, liabilities and opportunities can be missed which can incur further costs in the future.
  • Miscalculating valuation and structure – upward or downward can have a significant impact on the success of the transaction and the motivation/incentive for the sellers or management team.


  • Miscalculating synergies – miscalculating the impact or the speed at which they can be implemented may mean excess costs can be incurred or the business may be overvalued.
  • Integration – both operationally and culturally, if a detailed integration plan isn’t swiftly implemented this can incur further costs and issues such as drifting away from the integration plan, not grasping issues quickly or implementing changes or decisions.
  • Culture clashes – remain one of the biggest risks, starting with a failure to map the two organisational cultures and agree on how the new combined entity should operate.
  • Leadership – that is unmotivated, disincentivised, or unable to grasp the big picture.


If you would like to learn more about how member firms of Pandea Global M&A can support your business, or if you are an advisory practice interested in joining the network, please contact Callum and Connor.


Callum Sellar
E: [email protected]


Connor Monaghan
E: [email protected]