The certainty that some deals will go wrong — combined with an inability to see warning signs in advance — indicates more resources might be fruitfully devoted to playing out pessimistic scenarios and checking assumptions.
Toppan Vintage, a trusted financial printing and communications company, in partnership with Mergermarket, is pleased to present the newest edition of M&A Pulse newsletter. This newsletter features responses from US-based senior corporate executives who shared their insights on failed deals.
Lesson #7: Choose advisors carefully. Leading deal experts weigh in...
When deals go south, it’s not because dealmakers fail to seek out advice. Nearly all our respondents (98%) engaged third-party advisors to assist with deals that ended up flopping anyway.
The quality of the advice they received may therefore be another story. Close to 80% of respondents said they believe their advisors hold some blame for not calling out the risks involved in the acquisitions.
This result points to a tension in the role of M&A advisors, who are incentivized both to close as many deals as possible and also to provide sound counsel to their clients. It also suggests future dealmakers may want to select their advisors with as much caution and consideration as they choose their acquisition targets.
“We had third-party advisors helping us out. We wanted a local perspective,” said the CFO of a dairy producer based in Southern Europe. “All the risks were right in front of us and so were the consequences. The outcome simply didn’t favor us and we’re all responsible for it.”
The bottom line: The quality and fit of an advisory team can make the difference between a successful deal and a dud.
MASTERING M&A THE HARD WAY: LESSONS FROM FAILED DEALS
UNDERSTAND EXACTLY HOW AND WHY SOME M&A DEALS FAIL TO LIVE UP TO INITIAL EXPECTATIONS, AS WELL AS THE LESSONS THAT CAN BE LEARNED FROM THEM.