Do you have a proactive or reactive approach to acquisitions?
Does your company have a strategic or an opportunistic approach to acquisitions? We recently read an interesting article from McKinsey and Company on “M&A as a competitive Advantage” where they identified that at many companies, strategy provides only vague direction on where and when to use M&A and an unspecific idea of the expected source of value creation.
This is consistent with our experience that too many companies are simply willing to receive acquisition opportunities and then consider how it fits within the strategic framework rather than identifying which companies should be targeted for acquisitions.
McKinsey found: “companies using M&A indiscriminately to purchase growth or an asset, without a thorough understanding of how to create value in a deal relative to others, a so-called “best owner” mind-set. Rarely is there an explicit link to organic investments or the business cases for broader growth initiatives, such as developing new products or building a sales force to deliver an acquired product. As a result, companies waste time and resources on targets that are ultimately unsuccessful and end up juggling a broad set of unfocused deals.”
Do you have a clear view on the key themes that you are trying to address with your acquisition strategy?
Endeavour Capital’s activities include the proactive search for growing companies.