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āThe approach to M&A that creates more value than othersā
You have probably heard that most acquisitions fail to create value, which for the most part is true.
On the other hand, some of the best shareholder returns have come from serial acquirers like $CSU
āThe approach to M&A that creates more value than othersā
You have probably heard that most acquisitions fail to create value, which for the most part is true.
On the other hand, some of the best shareholder returns have come from serial acquirers like $CSU
1/ McKinsey & Company have published an incredible amount of research on the M&A approach that creates the most value.
The approach is exactly what Constellation Software has perfected to have a 33.5% annual shareholder return over 16 years since listing.
Chart: @theTIKR
The approach is exactly what Constellation Software has perfected to have a 33.5% annual shareholder return over 16 years since listing.
Chart: @theTIKR
2/The M&A approach is known as programmatic acquisitions.
Programmatic M&A entails pursuing a minimum of two small or midsize deals a year, with meaningful market capitalization acquired 20-30% (McKinney & Company)
Programmatic acquirers achieve a higher TSR than the median.
Programmatic M&A entails pursuing a minimum of two small or midsize deals a year, with meaningful market capitalization acquired 20-30% (McKinney & Company)
Programmatic acquirers achieve a higher TSR than the median.
3/ The other approaches to M&A that can be used as a comparison is; selective, large-deal & organic.
Each of which can create significant value for a company if executed well, but statistically have not created as much value.
Organic M&A was shown the be the most risky.
Each of which can create significant value for a company if executed well, but statistically have not created as much value.
Organic M&A was shown the be the most risky.
4/ Programmatic acquirers were shown to create a more durable business over the long-term (10 years).
5/ Programmatic M&A also leads to higher performance in almost every sector.
Tech companies have outperformed with large-deal M&A, but in all other sectors programmatic M&A has proven to be more effective is creating value.
Tech companies have outperformed with large-deal M&A, but in all other sectors programmatic M&A has proven to be more effective is creating value.
6/ Here is a small list of some successful programmatic acquirers:
Constellation Software $CSU, Lifco $LFY, Danaher $DHR, Transdigm $TDG, Heico $HEI.
In small-cap world: Kelly Partners $KPG, Teqnion $TEQ
Comment any others you follow below.
Constellation Software $CSU, Lifco $LFY, Danaher $DHR, Transdigm $TDG, Heico $HEI.
In small-cap world: Kelly Partners $KPG, Teqnion $TEQ
Comment any others you follow below.
7/ If you want to read the complete research from McKinney & Company you can visit:
mckinsey.com
mckinsey.com
8/ For a more digestible breakdown and analysis Iād recommend checking out this @europescuttle article.
scuttlebutt.co
scuttlebutt.co
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