Our M&A consultants work with companies to make mergers and acquisitions succeed and deliver superior returns by developing a repeatable model that is tied to the company’s strategy and customized to its experience. We help companies position themselves to take advantage of the global macro trends and capital abundance that are placing increasing pressure on them to grow.
Our analysis and years of experience indicate that M&A creates the most value when it is frequent and material over time. Those companies that have a repeatable model and institutional discipline to find, diligence and integrate companies over and over again – what we call Mountain Climbers – are the companies that far and away outperform in the marketplace.
From 2000 through 2010, total shareholder return (TSR) averaged 4.5% per year for a large sample of publicly traded companies around the world. Dividing this sample according to companies’ M&A activity, here’s what we observe:
- Players outperform bystanders. As a group, companies that engaged in any M&A activity averaged 4.8% annual TSR, compared with 3.3% for those that were inactive.
- Materiality and acquisition frequency matter—a lot. Companies that did a lot of deals outperformed the average most often when the cumulative value of their acquisitions over the 11-year period amounted to a large percentage of their market capitalization. Meanwhile, companies engaged in a modest amount of M&A and those that swing for the fences hoping to improve their business with a couple of big hits failed to deliver the highest returns.
- The gold standard of M&A is a repeatable model. Companies that built their growth on M&A—those that acquired frequently and at a material level—recorded TSR nearly two percentage points higher than the average.