Three factors for a successful M&A deal and how to make sure you’ve got them covered

Jerry Caruso, former managing director for Lazard Middle Market LLC, has served as a senior lecturer at the Carlson School of Management

You hear about them all the time–M&A deals that are touted as sure-fire successes, but which end up fizzling before the ink dries on the final paperwork. When AOL was purchased by Time Warner in 2000, everyone was sure it was the deal of the century–until they were quick to declare it DOA. When Boston Scientific bought Guidant in 2006, it was held up in the business press as a prime example of a poorly made deal. Every day, it seems, otherwise smart businesspeople make acquisitions that don’t live up to expectations. 

What went rightor wrong?

Why do so many deals head south? I decided to find out for myself. I started by categorizing and quantifying factors based on my own personal deal experience. As a former managing director for Lazard Middle Market LLC, I completed over 60 deals, including an early sale of a company to Warren Buffet. 

In my quest to learn how to identify the key factors behind successful M&A, I’ve taken my deal experience and applied those skills in an academic setting. For the past six years, I’ve been leading a Mergers & Acquisitions class here at the Carlson School. In developing the curriculum, I talked to executives who made deals work, dived deep into industry information, delved into new research and tapped into expertise from practitioners with specialties in legal, accounting, culture, negotiation, integration and more.

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The three factors that matter most

My research and business experience have led me to conclude that three “must have” factors point to a likely success and that having only one or two of those factors in place is an indicator of potential failure:

Strategy

Valuation

Integration and culture

During our upcoming three-day class, we’ll be covering all aspects of the factors behind this comprehensive framework for M&A success. When a deal fails, everyone seems quick to say that the buyer paid too much. But the actual factors of success and failure extend well beyond the deal price, and the problem typically includes factors including strategy, integration or culture, not just valuation. In this course, we’ll cover all three factors and help you identify how to create winning tactics for all of them.  

Enroll now: Class is December 3 to December 5

The M&A market is very strong, and its exuberance is reminiscent of the peak that was reached in 2007. If you’re a mid- to senior-level leader who has been tasked with evaluating and executing M&A and other strategic alliance decisions for your firm, you’ll want to attend this class before you make any major moves in this heady environment, in which many organizations are suffering from what I call “M&A envy.” After completing Carlson's Mergers & Acquisitions course, you’ll be well-grounded in these three success factors before you are required to make any major decisions.

In addition to my work with the class, sections will be led by senior lecturer Sid Benraouane and Aks Zaheer, professor and Curtis L. Carlson Chair in Strategic Management. We’ll also be bringing in practitioners from some of Minnesota’s leading companies and tapping into the collective wisdom of the class during out time together.

Hope to see you in class December 3–and I promise to share all the details of my Warren Buffett story on the first day!

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