Many executives don’t take enough time to think about the “why” of acquisition. They focus on conducting research, identifying targets, negotiation with owners and valuing companies and gloss over these grounding questions. But the foundation of every successful acquisition lies in your strategic rationale. Without this foundation, it’s impossible to guide your endeavors. If you embark …
Tag: one reason
Competing by Acquiring – Lessons from the Walmart-Flipkart and Nestlé-Starbucks Deals
There are many reasons to execute an acquisition from entering a new market to adding a new capability to increasing your bottom line. One of the most common reasons to buy another company is to prevent your competitor from owning it. Acquiring out of a defensive position to prevent a competitor from owning a key …
Remembering the Human Factor in M&A
For an owner of a privately-held company, the business is their baby and using hard-nosed tactics to negotiate for the lowest price is ill-advised. The human factor cannot be overlooked when pursuing M&A and establishing trust with an owner is critical. Buying a privately-held business is not like buying a car where you can negotiate the …
Strategic M&A: Berkshire Hathaway to Buy Precision Castparts
By now, many of you will have heard of Berkshire Hathaway’s $37.2 billion acquisition of Precision Castparts Corp. (PCC), an aerospace parts manufacturer. The acquisition is Berkshire Hathaway’s largest to-date which goes to show with each strategic acquisition, Berkshire Hathaway must make bigger and bigger deals to “move the needle.” Strategic and to the Point …
Why ConAgra Plans to Sell Ralcorp Less than 3 Years Later
Packaged food company ConAgra Foods plans to divest its private label branch Ralcorp after acquiring it in 2012 for $5 billion. Why is ConAgra spinning off this private label business so quickly after acquisition? The many reasons include pressure from activist investors, poor performance, increased competition, and tighter margins. Ralcorp’s revenues dropped by 6 percent …
Endo Grows Generic Drug Business with Par Pharma Acquisition
On May 18, Endo announced it would acquire Par Pharmaceutical for $6.5 billion cash and $1.5 billion stock. The acquisition is the latest consolidation in a robust M&A market, especially in the healthcare sector. Endo has stated multiple reasons for the deal, including building its generic drug platform as well as significant operational and tax …
Kroger Acquires Harris Teeter to Attract High-end Market
Big news from the grocery sector: Kroger will buy Harris Teeter for $2.5 billion following the trend of consolidation in the grocery industry. Earlier this year, Empire Ltd, the owner of Canadian grocery chain Sobeys, bought Safeway’s Canadian business for $5.7 billion in a “game changing” deal. As the supermarket industry becomes more competitive, companies …
