Number of major groups are built this way

Study after study, the observation is practically the same: on paper, only three out of ten mergers create significant value for shareholders. One in two in destroyed. Apparently, this does not prevent waves of mergers and acquisitions to succeed. After reaches peak in 2005, year of the redemption of Gillette by Procter & Gamble and the acquisition of Allied-Domecq by Pernod Ricard, the number of large-scale operations still remained high in 2006 with, among others, the acquisition of Arcelor by Mittal Steel, that of Schering by Bayer or the merger of Alcatel and Lucent. Because the merger-acquisition remains, despite its pitfalls and difficulties, the way Royal growth. Number of major groups are built this way. Take GE, Cisco, AXA or Johnson & Johnson or to InBev, spent a few years from a position of leader on the Belgian market to the status of leading world Brewer with brands like Beck's, Stella Artois or Leffe, due to regular and effective policy of acquisitions.

How these happy purchasers do to overcome what appears to be the major puzzle of leaders: conduct a good redemption thought until the creative integration of value Analysis of the achievements revealed six principles shared by the fusion-acquisition-integration as.

Multiply small operations to acquire expertise

Rather than engage with in huge and complex operations, best purchasers begin by achieving a series of acquisitions of smaller, more limited risk. In doing so, they refine their talent for acquiring and integrating companies more important, and gradually develop their own formula for success. It allows to avoid the mistakes made by beginners and occasional buyers....

Stay close to its core business

The created value is all the more important that the acquisitions are close to the core business of the company. Acquisitions to expand the range of products serving the same customers or retrieve (such as the purchase of Amoco by British Petroleum) market share have the highest probability of success. As regards the other incursions into the boundaries of the core business, it will read pages 5 and 6 section devoted to adjacencies.

Remain faithful to its investment policy

Happy buyers began by developing a genuine policy of investment and to consider to determine for each proposed why acquisition and how it could strengthen their existing activity. The stock exchange excels to detect operations which are not consistent with the strategy of the company. If the course of action of a society of more than 10 in the wake of the acquisition of a target, it is likely that there will still low for one or two years.

Asking essential questions

in the "due diligence".

The single audit exercise which are too often summarized analyses of targets, spinning huge amounts of information, is not sufficient to provide managers a true decision support. The best purchasers worry before all of the compliance of the operation in their investment policy. This is not the amount of information that made the difference, but the ability to identify what they know and what they should know, and then the determination and effectiveness for information. Institutional investors have much to learn "private equity" funds like KKR, Wendel, Eurazeo or Paribas Industrial Affairs. At each operation, they forge a new and critical vision and their target market, without any preconceived opinion about its future prospects. To answer questions regarding a purchase, they are developing their own vision from scratch, using information gathered directly with customers, suppliers and competitors of the target.

This is because Permira had asked the right questions, with a new eye, he managed one of its most beautiful in the British Arts and crafts market. To enquiring about the positioning of Homebase, leaders have indeed realized that stores were more visited by a female customer that such competitors B & q. contrary to general opinion, they then imagined the repositioning of the DIY chain towards a more "Deco" concept and less material, more close than large suburban area. This bet, designed stores, verified by more detailed quantified analysis, visits Permira was able to position Homebase as a flagship of the DIY player revel.

Quickly integrate what needs to be.

Many companies take a much too generic integration vision while only a few specific points are the success or failure of an acquisition. For example, in the world of specialty chemistry, the first lever of synergy is the pooling of supply chains. Materis paints ensuring integrate aspects industrial and logistics, while leaving the new very autonomous entities commercially (see box). As Schneider-Electric, it sets different models of integration depending on the type of acquisition (see box). In all cases, what matters is to act quickly to exploit the main sources of value that contains the redemption. It must also ensure that the operation converts to their mission teams in place; most must first continue to operate the pre-existing activity to the merger.

Expect everything

No redemption is never exactly proceeding as planned and the best buyers know that the obstacles will arise at one time or another. They implement alarm systems capable of detecting the problems to treat them as soon as they emerge. In doing so, they clearly make the difference between the inevitable incidents in this type of operation, and the warning signs of much more serious problems. In this phase, they must demonstrate discipline: to raze the past, their mistakes and take the necessary decisions, if difficult they are, to put the operation on the rails.

The merger in 2001 Kellogg cereals giant and the manufacturer of biscuits and cakes aperitifs Keebler is often cited as a strategic success. Kellogg, a long experience of acquisitions fort had developed a solid investment policy, and led in this redemption a true "due diligence" task. These two assets allowed him to identify significant savings but also to strengthen its position in the sector of the "nibble" growing. The operation also gave him access to the system of direct delivery of the points of sale of Keebler, allowing a more rapid rotation of the stock, as well as technology platform deployed in any particularly efficient company. However, certain things happened wrong on this acquisition. Cultural conflicts arose, with key leaders have left the company, and a change in technology resulted in an interruption in the process of commands. But coaching was able to manage these problems without difficulty, through adjustments in operation. Result: gains for investors who cease to grow.

For rapprochement of businesses, the facts speak for themselves: experienced purchasers, to strengthen their business, develop a clear investment policy and conduct of due diligences worthy of this name. They are able to show both speed and flexibility to bring activities and can thus harvest of excellent returns on investment. Those who adopt these principles, they create that huge catch of head accompanied by loss of money