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There are several attractive reasons why companies follow acquisition strategies, including increased market power or so they can enter a new sector or market. However as is often the case, there is a catch to acquiring one's way to growth. Research says up to 90% of acquisitions fail (Business Review Europe, 2015).
This presentation reviews the key reasons for acquisition failure and outlines a 3-step process to unlocking the value from your acquisition:
1. Find the right target.
2. Embed effective PMI capability in your organization.
3. Communicate candidly with your shareholders.
Additional concepts discussed include Market Environment Map, Deal Assessment Process, One-time vs. Active Buyers, and Shareholder Communication. This framework is designed for CEOs considering, or going through, an acquisition.
This deck also include templates you can sue for your own business presentations.
Unlocking Value through Acquisition delves into the intricacies of successful M&A strategies, emphasizing the importance of rigorous target selection and effective post-merger integration (PMI). Corporate leaders often cite poor deal preparation, inadequate PMI, and bad market timing as the primary reasons for acquisition failures. This presentation provides a detailed analysis of these pitfalls and offers actionable insights to mitigate them.
The PPT highlights the necessity of a disciplined analytical approach in the target selection process. It underscores the importance of not taking shortcuts and embedding the target search process within your organization. This ensures a thorough evaluation of potential targets, increasing the likelihood of a successful acquisition. The framework also includes a Market Environment Map to help assess the viability of acquisitions in different market conditions.
Active buyers, with their established PMI capabilities, tend to outperform one-time acquirers. This presentation outlines the differences between these two types of acquirers and provides strategies for building PMI capability in-house. By following the principles and guidelines provided, CEOs can enhance their acquisition strategies, leading to higher shareholder returns and sustainable growth.
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Source: Best Practices in Acquisition, PMI PowerPoint Slides: Unlocking Value through Acquisition PowerPoint (PPT) Presentation Slide Deck, PPT Lab
This PPT slide presents a visual representation of the deal assessment process, highlighting its selective nature. It begins with a total of 100 deal opportunities screened, which serves as the starting point for potential acquisitions. This figure is significant as it underscores the extensive initial evaluation phase that organizations undertake before narrowing down their options.
As the process progresses, the number of opportunities considered drops to 40. This reduction indicates a rigorous filtering mechanism where only the most promising deals are advanced for further scrutiny. The next step involves conducting a detailed review, which further narrows the selection to 28 opportunities. This stage likely involves assessing strategic fit, financial metrics, and potential synergies.
The slide then illustrates the in-depth due diligence phase, where the number of opportunities decreases to 14. This phase is critical, as it involves a comprehensive examination of the target’s operations, financials, and legal standing. It’s a time-consuming process that requires significant resources, reflecting the seriousness with which organizations approach potential acquisitions.
Following due diligence, the binding offer stage sees a drop to 8 opportunities. This indicates that only a fraction of the reviewed deals are deemed worthy of a formal offer. Finally, the slide concludes with just 5 deals ultimately closed, emphasizing the high level of selectivity throughout the process.
The concluding note encourages a thoughtful approach to acquisition prospects, reinforcing the idea that taking time in the assessment phase can lead to more successful outcomes. This slide effectively communicates the importance of a disciplined deal assessment process, which is essential for making informed acquisition decisions.
Sorry, this document is currently only available to FlevyPro subscribers.
You can join FlevyPro for only $39/month.
Or, you can subscribe to the Post-merger Integration (PMI) Stream, our curated collection of Post-merger Integration (PMI) frameworks.
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