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- W2161519157 abstract "This paper organizes a variety of existing strategy theories, typologies and models into a framework that can be used to analyze and validate the investment thesis for a proposed acquisition by a strategic or corporate buyer. One dimension of the framework utilizes the classical models and theories of strategy. A second dimension applies models that were developed to understand M&A value creation. The third perspective examines if the acquirer is the best parent for the target firm. A fourth approach is to utilize tools that “stress test” the investment thesis based on common causes of M&A failure. Over the last decade, there has been significant progress in the implementation of mergers and acquisitions as many of the best practices for merger integration have been adopted by practitioners. Likewise, extensive academic research and the expertise of investment bankers and other advisors has ensured that effective execution in valuation, deal financing and the entire deal phase of a merger. However the use of sound theory and best practices during the strategy phase, which provides the allimportant direction and foundation for the deal phase and integration phase, does not appear to have migrated into the M&A process at most firms. Neither brilliant financial engineering nor excellent merger integration work can overcome a flawed deal ‐ successful acquisitions must start with a solid rationale which ensures the deal is tied to the firm’s overall strategy and will clearly advance the firm along its defined strategic path. The early focus of M&A practice improvement was on the financial engineering issues determined during the deal phase. The next generation of research identified that poor execution during the integration phase accounted for a significant portion of deal underperformance. Recently literature has shown that a sound investment thesis is a key determinant in deal success (Bruner, 2004). While it might seem obvious that a sound deal premise is necessary, its importance has been underappreciated and it is often difficult to ensure that the investment thesis is valid (clearly tied to the firm’s overall strategic plan), clear (defined, not vague, unambiguous) and sound (based on accurate information that has been verified). Indeed, Harding & Rovit (2004) found that 40% of deals had no written investment thesis." @default.
- W2161519157 created "2016-06-24" @default.
- W2161519157 creator A5070128099 @default.
- W2161519157 date "2013-04-01" @default.
- W2161519157 modified "2023-09-24" @default.
- W2161519157 title "A Framework for Validating an M&A Deal Thesis" @default.
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