M&A Keep our heads this time?

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The Economist reports that M&A activity is bouncing back, and as noted in other posts (search ‘downturn’ and ‘crisis’), strong firms should be taking advantage of weak conditions to buy up low-priced opportunities – provided of course they know how to do that well (see Building acquisition capability).

Let’s beware, though, of the dark side of M&A

  • the pursuit of growth for growth’s sake, with no resulting strategic advantage
  • ego-driven lunacy (remember Royal Bank of Scotland)
  • … not forgetting, of course, that many deals are sold by advisors, regardless of their advisability to the client.

If our CEOs and Chief Strategy Officers can just keep their heads this time, perhaps the 2015 downturn will not be quite as bad as the 2008 one.

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Comments

  1. Conal  November 1, 2009

    What do you think about the Co-op bank merging with Britannia building society and the Co-op supermarket aquiring Somerfield?

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  2. Kim  November 2, 2009

    There clearly needs to be some sorting out of the UK banking sector, in which mergers and acquisitions will surely play a part. I would not want to comment on specific cases without detailed examination, but both these examples appear at first sight to make sense by creating more substantial entities to compete better with larger rivals.
    It also looks like the UK Govt is planning to de-merge some banks, to re-create a competitive market structure and avoid us having a ‘too big to fail’ problem in future.

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