Mergers and acquisitions

The business situation generates great opportunities in the purchase and sale of companies. Nevertheless, the lack of adequate strategies along the transaction could cause the acquisition of the company to affect the value of the investment of the stock/shareholders. The economic reactivation, just like the stabilization of Covid-19 cases have led to the market of mergers and acquisitions to be booming. The growing availability of resources and the appetite to diversify investments have been the principal drivers of this growth.

Published on September, 2021 Ana Karen Tello & Jorge Juarez
The main trends presented in the M&A industry are: Shares with a greater preponderance of the Private Equity industry, record levels of “Unicorn” companies, operations through SPACs and financing sources more oriented to ESG criteria. In the case of Mexico, the available information about transactions of purchase-sale is not precise, largely due to the low willingness of Mexican businessmen. Most operations of small and medium companies do not go public.

Companies should consider all their available options for value creation before thinking to grow via acquisitions. The creation of a new product represents the first alternative being the one with the greatest immediate impact. The search for synergies is one of the most mentioned justifications in the M&A operations, allowing to increase profit, reduce costs or upgrade other business operations and the relationship with suppliers and optimization of inventory.

The company’s growth through acquisitions is a capacity that is developed over time. The main reason of failure in M&A operations is the absence of adequate planning, execution, and adequate monitoring of the process of integration in companies, after a purchase-sale transaction. The recommendation is to follow a programmatic and continuous process with acquisitions of smaller sizes companies that contribute to organic growth.

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