Mergers & Acquisitions

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Mergers & Acquisitions

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What does M&A encompasses?

Mergers and acquisitions together with divestitures typically encompass numerous types of company restructuring approaches. These can vary based on the type of control, purpose, and other criteria. Our comprehensive M&A overview will help you to navigate through this topic. If you are interested in discussing this topic further, please connect with us.

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How does it work?

When two or more companies merge, they create a new entity that often benefits from both merged parts (e.g. cost position, broader product/services offering, know-how, market access etc.). There are numerous types of mergers described in detail further below.

    M&A Examples:
  • ● Disney and Pixar
  • ● Exxon and Mobile
  • ● Comcast and Time Warner Cable

Acquisition is sometimes seen as an extreme case of a merger where one company takes over another company incorporating it into it’s own entity.

    M&A Examples:
  • ● Microsoft and Skype
  • ● TransCanada and Columbia Pipeline Group
  • ● Dell and EMC

Divest

Companies often spin off creating separate entities out of divisions or subsidiaries. As a result of a spin-off, shares of subsidiaries are distributed back to shareholders as a dividend.

    Examples:
  • ● GE and Synchrony Financial
  • ● Siemens AG and Osram
  • ● Pfizer and Zoetis
  • ● Onex and Celestica
  • ● Shaw Communications and Chorus Entertainment

A Split-off is when after separating a company division or subsidiary, the stakeholders have to choose between keeping shares of the original company or changing some (or all) original shares into shares of the split-off company. As a result of a spin-off shares of subsidiaries are distributed back to shareholders as a dividend.

    Examples:
  • ● MetLife and RGA (Reinsurance Group of America)
  • ● Procter & Gamble and Folgers
  • ● Ebay and Paypal

A carve-out is a sale of a minority interest to other companies. Typically the seller gets compensated through cash inflow or other financial compensation.

    Examples:
  • ● Thomas Reuters and IP&S
  • ● Microsoft and Nokia

Types of Mergers and Acquisitions

Mergers and acquisitions come in all forms and shapes. They can vary by a control degree of an acquired entity or by its purpose. The type of acquisition may often dictate the Post-Merger Integration approach and also the degree of integration.

By control degree

This type of acquisition is often used in order to preserve and grow the existing company that already performs very well and, in particular, if it has an independent brand that carries significant value.

    M&A Examples:
  • ● Microsoft and LinkedIn
  • ● Fiat and Ferrari
  • ● Desjardins Insurance and State Farm (CAN)

A merger under equals is considered when both sides bring considerable assets into the merger e.g. from a market, product/service or capabilities perspective.

    M&A Examples:
  • ● Ernst and Young
  • ● Dow Chemical and DuPont
  • ● Exxon and Mobil

A Take-over is an example of a full acquisition (sometimes also a hostile acquisition). In this case most of the functions, and often a brand, are digested by the company that did the purchasing.

    M&A Examples:
  • ● HP and Compaq
  • ● Vodafone and Mannesmann
  • ● Aviva Friends Life (UK)

By purpose

Acquisition of / a merger with a company which competes in the same space in terms of the value chain. The main purpose here is to increase market share, drive economies of scale or Increase presence in other geographies.

    M&A Examples:
  • ● Daimler Chrysler
  • ● Marriott and Sheraton hotels
  • ● Groupon and Citydeal

Acquisition of a company or a merger with a company in way that both companies complement one joint value chain.

    M&A Examples:
  • ● Timewarner Cable and Turner
  • ● KPMG and Secor Consulting in Canada

Acquisition of / merger with a company which is active in a partly or entirely different space. These are called respectively mixed or pure conglomerate mergers.

    M&A Examples:
  • ● P&G and Gillette
  • ● Walt Disney and ABC
  • ● Microsoft and LinkedIn

Acquisition of a public company via a private company with the purpose of using the public company as a shell. By merging both companies, the private company becomes public without IPO. It is a cheaper and faster alternative to making a company public.

    M&A Examples:
  • ● Aérospatiale and Matra
  • ● Atari and JT Storage
  • ● ABC Radio and Citadel Broadcasting Corporation

Our Mergers and Acquisitions Resources for You (coming soon)

M&A Glossary
M&A Tools
M&A Experts

How our Post Merger Integrations services can help you

A very significant part of mergers and acquisitions fails to deliver on expected benefits. An integration of any merger or acquisition should be planned and executed with accuracy and precision in order to deliver expected benefits. The heavy-lifting comes after the deal closes.

Our PMI experts have extensive experience in setting up an integration governance, putting in place structures required for a successful integration and working hand-in-hand with your teams to define all elements of the target state in details and executing towards this plan. Simultaneously we will make sure that you deliver on estimated benefits and extract value of your M&A deal.

Want to find out how our Post Merger Integration specialists can support your merger, acquisition or divestiture?