Even in the best of times, M&A is a risky venture: between 70 and 90% of acquisitions fail. Now, with private equity facing global declines and decreased deal volume, it’s all the more critical that CXOs identify and mitigate potential pitfalls that could derail a deal.
One of the biggest pitfalls is failing to understand and prioritize the role people play in these transactions. By communicating with and leveraging the expertise of these four stakeholder groups throughout the M&A cycle, you are better positioned for success.
Collaborate With Your Sponsor
Sponsors are essential to conducting a lucrative deal, as they typically possess extensive industry knowledge and relationships. CXOs often seek their sponsor’s support in assisting in deal flow and due diligence, as well as with navigating legal documentation and deal construction. In fact, strong investment skill was one of the nine hallmarks executives emphasized in our report on attributes of excellent private equity sponsors.
That said, many of our recent survey respondents noted that their sponsor was less effective when they got too deeply involved — particularly around the integration and implementation of systems. If a sponsor’s
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