In the dynamic business environment today, M&A is one of the most important strategic growth options that an organization can adopt to increase market share, achieve entry into new markets, or receive new technology. However, not all M&A deals turn out successful. There are innumerable factors that may make or break a deal. In the article, we will look at some of the greatest mergers and acquisitions in the past decade and what lessons we can learn from them to have an effective M&A strategy.
1. Disney and Marvel
In 2009, Disney acquired Marvel Entertainment for $4 billion to access some of the world's most popular and profitable superhero franchises, such as The Avengers and Iron Man. Greatness in all of this can be traced back to the fact that Disney can take advantage of Marvel's valuable intellectual property while, at the same time, further allowing Marvel creative control over its characters and stories.
Lesson: While acquiring a firm with very useful IP, one needs to strike a balance between using that IP and giving creative autonomy to the acquired company.
2. Facebook and Instagram
In 2012, Facebook acquired Instagram for $1 billion, further solidifying Facebook's dominance over other social media. With its high growth rate and large user base, Instagram was an attractive acquisition target, and Facebook could cash in on the photo-sharing network's strengths with visuals and mobile-first designs to complement its offerings.
Lesson: When thinking of acquiring a company, look at how this company's strengths and singularities can be used to improve your own offerings.
3. Amazon and Whole Foods
In 2017, Whole Foods was acquired by Amazon for $13.7 billion as it made its foray into the grocery business. If anything, Amazon cashed in on leveraging Whole Foods' brick-and-mortar against the established brand to reach out more and provide a level of inconvenience to customers.
Lesson: Acquiring a company with an established brand and having a physical presence facilitates new opportunities of expansion and gives way to better convenience for customers.
4. Microsoft and LinkedIn
In 2016, Microsoft took over LinkedIn for $26.2 billion to extend the fast-growing professional network and rich data within it to Microsoft. Microsoft was later in a position to leverage this data for improving its offers, including productivity software and cloud services.
Lesson: Acquiring a firm with valuable data can open up a whole new avenue of opportunities in terms of innovation and product development.
5. Apple and Beats Electronics
In 2014, Apple acquired Beats Electronics for $3 billion, thereby opening the possibility for selling extremely popular headphones and music streaming services under the Beats brand. For improving its offerings within the music world, Apple leveraged the brand and fierce following behind Beats.
Lesson: Acquiring a business with a strong brand and high following helps one enter a new industry or offer more services within an existing one.
The top M&As of the past decade demo how companies should develop a successful M&A strategy.
In understanding what worked behind the success of these transactions, you can ward off all sorts of risks and make informed choices to more likely realize a success case for your M&A initiative. Be it a company acquisition for its intellectual property, data, brand, or customers, careful consideration and strategic planning are important.