Post-Merger Growth Due Diligence

This paper is a short summary of my DBA thesis proposal which was submitted to Henley Business School in 2009. The content covered in this paper stems from my experience as an M&A professional at one of the global transaction advisory firms. As a contribution in the new book of European Business School, Value in Due Diligence, I argue that post-merger success ultimately (e.g. increasing shareholder value) occurs only as a result of a continuous internal growth of the combined post-merger organisation. I stress that successful M&A players develop sustainable internal growth after the integration phase. Simply put, they generate value, extend customer base, improve revenues, focus on existing and new customers, excel in customer operations and are successful innovators. In contrast, companies that are witness to transaction failure are not able to develop internal post-merger growth on the basis of the acquired capabilities. When they go through M&A deals, they purchase revenue streams of the target and destroy value. Ex-ante, they fail to achieve the strategic objectives underlying the rationale of the M&A option. Their post-merger integration plans do not transform the “pre-merger acquired capabilities” to “post-merger integrated competence.” At the same time, we accentuate that post-merger threshold capabilities permit internal growth following acquisition games