Five Ways to Spot a Good Deal
Monster deals are back in vogue. In the last five months alone, 13 deals have been announced with valuations totaling more than $10 billion: Proctor & Gamble/Gillette; UJF/Mitsubishi Tokyo Financial and HEXAL/Novartis just to name a few global giants. And then there's the battle between Qwest and Verizon to acquire MCI.
Every time another behemoth deal is announced, investors quake. History has not been kind to shareholders of mega acquirers. Consider: Of 790 deals greater than $250 million between 1995 and 2001, only three in 10 have created meaningful value for those shareholders footing the bill. Slightly more than half actually destroyed value. Big deals can be perilous.
Yet, many great companies were built on deals, and many deals clearly are winners. Think of Cisco, the router company, Sysco the food service distributor, and Clear Channel, the global communications firm, to cite three names associated with deal success.
So, after whistling at the size of the latest big deal, how can an investor judge whether a management team is following a prudent course? Our research concludes that deal success is not random. There are clear indicators that investors can use to assess whether they should expect a huge success or a big flop. Investors can handicap their management team's likelihood of success on five criteria:
Is management experienced in deal making? It is a fact that frequent acquirers earn higher shareholder returns than companies that do few deals or none at all. While this may seem paradoxical, we've found that first-time and infrequent acquirers make rookie mistakes that cost their shareholders dearly. Companies with functional expertise in deal making know how to buy and integrate businesses, and it shows in excess shareholder returns. By far the worst returns accrue to companies that do large, one-off acquisitions.
Will the acquisition strengthen the buyer's core? Scale deals -- with big overlaps of operations -- that reinforce the core have good return profiles, but scope deals that take a business into a new direction often disappoint. We found scale deals outperform scope deals by nearly 50% two years out. A management team should be able to articulate how a deal will make the current business better. The stock market is very good at detecting deals with a poor investment thesis. If an acquirer's stock drops more than 10% relative to industry peers on deal announcement, odds are 75% that the price will still be down two years out.
Did management do its homework? Many corporations do weak strategic due diligence. They should learn from the masters, private equity houses like Texas Pacific Group, Blackstone and Bain Capital. Private equity buyers don't assume they know about a business on the market. Corporate buyers tend to "audit" business in industries they know well. The result is myopia on key issues around customer relations, supply arrangements and the inevitable "window dressing."
Is management addressing merger integration issues up front? Bad deals unravel during integration. In our experience with mergers of big equals, blending management teams can lead to fuzzy decision-making. In scale deals, the best integration is both comprehensive and fast, with an open acknowledgment that there will be one cultural acquirer, which may not be the buyer. In scope deals, the best integration is minimal. The vast majority of companies involved in big deals lose market share in the year after announcement. The first priority of merger integration should be to make sure this does not happen.
Is the executive team prepared for the unexpected? No deal comes off exactly as planned. Experienced deal makers install early-warning systems to detect failures in accounting, distribution and customer service. The Kellogg/Keebler merger is often viewed as a great strategic deal. A lot went wrong, but management was expert at making mid-course corrections The result was upside surprises for investors.
Investors and analysts should ask these tough questions of their executive teams. The data is overwhelming: Experienced acquirers who reinforce their base business, have done their homework and can put businesses together quickly and flexibly earn out-sized returns on mega deals. Executives who do not create bigger problems.
Messrs. Harding and Rovit, Bain & Company partners, are co-authors of "Mastering the Merger: Four Critical Decisions that Make or Break the Deal" (Harvard Business School Press, 2004).
判断并购交易是否成功的五项标准
超级并购交易再次成为潮流。仅仅在过去5个月中，已宣布的交易中就有13宗的交易估值超过了100亿美元：宝洁公司(Procter & Gamble Co., 又名:宝硷公司)与吉列(Gillette)、UJF与东京三菱金融集团(Mitsubishi Tokyo Financial Group Inc.)、以及HEXAL与诺华制药公司(Novartis AG)就是其中的几起。另外还有Qwest和Verizon争夺MCI的竞购战。
每宣布一次大规模的交易，投资者就受到一次冲击。从历史角度看，大型交易对股东而言并不见得是什么好事。比如，在1995年至2001年间交易额超过2.5亿美元的790起交易中，只有十分之三为股东创造了良好的价值。略高于一半的交易实际降低了股东价值。巨额交易可能充满风险。
当然，许多大公司都是通过并购交易发展壮大的，许多交易也明显获得了成功。如路由器生产商思科系统(Cisco)、食品服务分销商Sysco以及全球通讯企业Clear Channel都是在并购交易中大获成功的企业。
因此，在对最近几起交易的庞大规模感到震惊之余，投资者如何判断一个管理团队是否经过了谨慎的权衡呢？我们的研究发现，交易的成功并非偶然。投资者可通过几个明确的指标判断一起交易是会取得巨大成功还是以惨败收场。投资者可以通过以下5个标准判断管理层取得成功的可能性：
管理层是否具备丰富的交易经验？事实是经常进行收购的公司比很少或从未进行过并购的公司能够创造更高的股东回报率。尽管这看起来有些荒谬，但我们发现首次或很少进行收购交易的公司会犯一些低级错误，让股东付出不菲的代价。具有专业交易技能的公司了解如何收购和整合业务，并能带来更大的股东回报。迄今为止，回报率最差的是那些进行大规模一次性收购的公司。
收购能否强化买方的核心业务？规模交易会带来明显的业务重叠，从而加强具有良好回报率的核心业务，但追求业务范围扩大的广度交易将把公司进入新的领域，而结果经常会令人失望。我们发现两年后规模交易的表现要比广度交易好出近50%。管理层应该能够清楚说明交易将如何改善现有业务。股市非常善于发现投资前景黯淡的交易。如果在宣布交易时，收购方的股票价格相对于业内同行下降10%以上，两年后价格仍然下跌的几率就会高达75%。
管理层是否准备充分？许多企业在进行战略尽职调查方面做得不够。他们应该向专家学习，例如Texas Pacific Group、Blackstone和Bain Capital等私有资本运营机构的经验。这些买家并不妄言他们了解市场上的业务。企业买家则愿意“审计”他们非常了解的行业中的业务。其结果是在客户关系、供应管理和不可避免的粉饰账面等关键问题上难免目光短浅。
管理层是否提前著手解决并购整合问题？不成功的交易在整合期间就会露出端倪。根据我们对规模接近的大公司之间并购经验的研究，管理团队的合并可能导致决策的混乱。在规模交易中，最佳整合是全面而且快捷的，并公开承认将有一个企业文化的主导方（可能并非收购方）。在广度交易中，最佳整合是最小限度的变动。在宣布交易的一年内，绝大多数进行大规模交易的公司都会丧失部分市场占有率。并购整合的首要任务应是确保不牺牲市场占有率。
高级管理层是否为意外情况做好准备？没有任何交易能够完全按计划进行。经验丰富的交易决策者会制定早期预警机制，以发现会计、分销和客户服务方面的错误。家乐氏(Kellogg Co.)与奇宝(Keebler Foods Co.)的合并经常被视为伟大的战略交易，实际上也出现了很多不足，但管理层善于进行中途调整，最后的结果大大好于投资者的预期。
投资者和分析师应该向高级管理团队提出这些尖锐的问题。数据的结果是显而易见的：旨在强化基础业务、认真进行调查研究并能迅速而灵活地整合业务的收购方才能在大型交易中获得更高的回报。否则就会遇到更棘手的问题。
