LETS MAKE

A DEAL
Inside the Mergers and Acquisitions Game
A MarketPoint Infographic

Coming to Terms with the M&A Game

Merger Acquisition Spin-off
refers to the combination (including hostile takeovers) refers to refers to the sale of a
of two companies to form the purchase of one company by another, subsidiary company, resulting
a new company. without the formation of a new company. in a new company.

2015 was a Record Year for M&A Deals

$4.25 trillion Total global volume of M&A deals exceeded $4.25 trillion U.S. dollars. (Statista)

$120 billion $81 billion $79 billion

Anheuser-Busch InBev acquires Royal Dutch Shell acquires British Gas Charter Communications
SABMiller (cornering one-third of the (Graham) merges with Time Warner
worlds beer supply) (Graham) Cable (Graham)

$68 billion $67 billion $56 billion

Dow Chemical merges with DuPont Dell acquires EMC in the largest tech Energy Transfer Equity
(Graham) deal in history, by far (Miller) merges with Williams
(Graham)

$55 billion $48 billion $47 billion

Heinz merges with Kraft Foods (Graham) Anthem merges with Cigna (Graham) eBay spins off PayPal (Graham)

2016 Wasnt Too Shabby, Either

$85.4 billion $66 billion $58 billion

AT&T merges with Time Warner (Shen) Bayer merges with Monsanto (Shen) British American Tobacco merges
with Reynolds American (Shen)

$52 billion $47 billion $26.2 billion

Sunoco Logistics merges with Energy Qualcomm merges with NXP Microsoft acquires LinkedIn, paying a
Transfer Partners (Shen) Semiconductors (Shen) 50% premium over share price, making it
the third-largest acquisition in the history
of the tech industry (The Economist)

What Could You Do with a Trillion Dollars?

If one dollar could take you back one minute

in time, a trillion dollars would take you back
1.9 million years!

One dollar bill weighs about

(You Are Here) one gram

One trillion grams A stack of one trillion crisp U.S. dollar bills
would weigh as much as The would reach 63,000 miles
Golden Gate Bridge (Robinson) above the earths surface (IHTD)

Not So Fast 80% of Acquisitions Fail (and heres why) 80%

1 2
Acquiring companies fail to understand the markets
Acquiring companies
of their acquisition targets; examples may include
overestimate the potential
Microsoft (which wrote off almost all of the $7.9 billion
return on acquisitions and
it paid for Nokia), Google (which bought Motorolas
simply pay too much
handset for $12.5 billion only to sell it for $2.9 billion),
(Christensen).
HP (which lost more than $8.8 billion on its acquisition
of Autonomy), and News Corp (which bought MySpace
for $580 million and sold it for $35 million) (Martin).

3 Executives often fail to distinguish between deals that might improve operations and
those that could dramatically transform the companys growth prospects. And so,
they either pay too much, or they fail to integrate appropriately (Christensen).

4 Senior managers are often so caught up in the

moment that they become spread thin and
ignore their core businesses (McClure). 5 Cultures of the two organizations collide,
causing resentment and lost productivity
(McClure).

6 Companies focus so much on cutting

costs after the merger that they lose
revenue momentum (McClure). 7 Companies may walk away from
potentially transformative deals, thinking
they are overpriced (Christensen).

But Then Again (Martin)

45 years $404 million $50 million

The number of years Warren
Buffett invested in his rolling
acquisition of GEICO, making
Buffett one of the wealthiest
men in America.
How much Apple paid for NeXT, to position How much Google paid for
Apple with a new operating system and bring Android, gaining a foothold in
Steve Jobs back, setting the stage for the mobile communications, one of
greatest accumulation of shareholder value the largest and most important
in corporate history." markets on the planet.

So, Where Are We Headed? (Porzio)

Social deal-making, the use of social computing
and online deal sourcing, will connect
sellers with buyers at an increasing rate.
Deal sourcing platforms like Dealnexus will
become mainstream.
Driven by tighter internal governance and
increased risks to the transaction, deals will
leak far less often, improving their odds
of being completed.

Companies boards and senior The Federal Trade Commission and the
managers will improve their levels of Department of Justice will become more
engagement with institutional investors aggressive in enforcing anti-trust, making
it
to manage shareholder activism and reduce more challenging for major players
the influence of activist hedge funds. in a market to acquire or merge.

What Are the Keys to Success? (Rigby)

Prioritize Articulate and Design the new Customize your

based on your merger's communicate organization and integration plan to address
strategic rationale and goals the deal's vision operating plan with care specific challenges

100 day

Act quickly to capture Redene your Work hard to Implement the

economies of scale business model to get the understand brand integration plan
model right positioning and aggressively; by Day 100,
product growth the merged company
opportunities should be operating and
contributing value

Christensen, Clayton M., Richard Alton, Curtis Rising, and Andrew Waldeck. The Big Idea: The New M&A Playbook. March 2011. Article. 24 June 2016.
<https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook>.
Graham, Luke. Mergers and Acquisitions. 24 December 2015. Web. 24 June 2016.
<http://www.cnbc.com/2015/12/23/the-biggest-merger-deals-of-2015.html?slide=1>.
Martin, Roger L. M&A: The One Thing You Need to Get Right. June 2016. Article (from the June 2016 edition). 23 August 2016.
<https://hbr.org/2016/06/ma-the-one-thing-you-need-to-get-right>.
McClure, Ben. Mergers and Acquisitions: Why They Can Fail. n.d. Article. 16 June 2016.
<http://www.investopedia.com/university/mergers/mergers5.asp>.
Miller, Ron. Dell Buys EMC For $67B In Largest Deal In Tech History. 12 October 2015. Article. 23 August 2016.
<https://techcrunch.com/2015/10/12/dell-buys-emc-for-67b-in-largest-deal-in-tech-history/>.
Porzio, Matt. Looking Ahead: M&A Trends In 2016. 8 January 2016. Article. 28 June 2016.
<http://www.forbes.com/sites/mattporzio/2016/01/08/looking-ahead-ma-trends-in-2016/#6f7b2f113942>.
Rigby, Darrell K. "Mergers & Acquisitions." 10 June 2015. Bain & Company: Insights. Web. 24 June 2016.
<http://www.bain.com/publications/articles/management-tools-mergers-and-acquisitions.aspx>.
Shen, Lucinda. Here are the 5 Biggest M&A Deals of 2016. 28 December 2016. 31 01 2017.
<http://fortune.com/2016/12/28/mergers-and-acquisitions-donald-trump/>.
Statista. Value of merger and acquisition deals worldwide from 2007 to 2015. 2016. Web Page and Charts. 16 06 2016.
<http://www.statista.com/statistics/293308/value-of-global-merger-and-acquisition-deals/>.
The Economist. "Linked Up." 18 06 2016. The Economist. Article (from the print edition). 24 06 2016.
<http://www.economist.com/news/business-and-finance/2170060-it-one-most-expensive-tech-deals-history-it-may-not-be-smartest-making-sense>.

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