Although success at deal making isn't easy, many great companies were built on deals, and many deals are clear winners. In fact, Bain's research has found that companies with a strong history of deal making earn higher shareholder returns than those that do few deals or none at all. Think of GE, Cisco, and Johnson & Johnson, just to name a few. All of those companies have flourished through smart deal making.

How can acquirers overcome this conundrum? By employing specific tactics and behaviors that improve the odds that acquisitions will succeed.

Pursue game-changing M&A and partnerships
Harvard Business Digital 2/11/2009
by David Harding and Darrell Rigby
For companies that are relatively strong strategically and financially, recessions present rare opportunities to improve their competitive position through acquisitions and partnerships. Read more

Bain's M&A experience and perspective

From this experience we have learned that a disciplined approach to the acquisition process is vital to ensure success. Stated boldly, the disciplines seem a bit obvious. Yet they so often are ignored. And when they are, the cost is enormous to shareholders and other stakeholders of firms involved. The disciplines are:

• Invest with a thesis - Acquisitions are growth strategies. Successful deals have an investment thesis that is founded on a firm's portfolio needs and basis of competition.
• Ask the big questions - Focus on the few, big questions in due diligence that test the investment thesis.
• Integrate where it matters - Prioritize getting at the key sources of value. Gain more by integrating less.
• Plan for contingencies - Know what you can and cannot do and prepare for things to go wrong. They will.

To find out more about Bain's work in this capability area, please contact the practice.