{"id":78191,"date":"2020-07-24t12:00:54","date_gmt":"2020-07-24t16:00:54","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=78191"},"modified":"2020-07-29t09:19:17","modified_gmt":"2020-07-29t13:19:17","slug":"why-many-mas-fall-short-of-expectations","status":"publish","type":"post","link":"\/\/www.g005e.com\/2020\/07\/24\/why-many-mas-fall-short-of-expectations\/","title":{"rendered":"why so many m&as fall short"},"content":{"rendered":"
<\/a>plus: the 3 prongs of culture and why they matter. by domenick j. esposito<\/i> principally because of the \u201cpost covid-19 blues\u201d and anticipated difficulty in growing organically at an acceptable rate and because of the ever-increasing number of baby boomer retirements, there is a sense that small and mid-sized firms will continue to merge at a healthy pace.<\/p>\n exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p>\n to illustrate, in just the past few weeks, we learned that anders cpas + advisors picked up cummings, ristau & associates (both of st. louis), adams, brown, beran & ball chtd (great bend, kansas) added jonesboro, arkansas office of egp pllc and hancock askew & co. (georgia and flordia) acquired capa (miami). these are noteworthy transactions and we believe that there are more to come. when we speak to ceos and other senior management at the top 100 and other fast-growing firms, it\u2019s apparent that many, if not most, of these mergers\/acquisitions fall significantly short of growth and profit expectations. some even wind up in divorce with costly breakup costs as morale drops, go-to-market opportunities fail to materialize, and key partners and potential partners leave for other opportunities. and for every transaction that actually does happen, it is also apparent that handfuls of potential deals die at the altar.<\/p>\n \u201cfailed culture integrations are often at the heart of merger difficulties.\u201d \u2013 louis v. gerstner<\/p><\/blockquote>\n so, we thought it would be helpful if we took a deep dive into merger and acquisition difficulties and offered some advice. the following summarizes our observations as to why many mergers\/acquisitions fall short of expectations and why so many more die at the altar:<\/p>\n you notice that we identify irreconcilable culture clashes or differences as the #1 reason why transactions run into difficulties and that valuation and other deal considerations are identified as reason #11.<\/p>\n while many people believe deals fall apart because of economics, we have found that while economics is clearly important, this conclusion is a myth. here\u2019s why. financial considerations in a transaction are usually flushed out quickly. if there isn\u2019t a meeting of the minds, deal discussions shut down. little ventured; little gained. further, we have found that valuation and other deal considerations most times can be successfully negotiated if the two firms believe that 1+1=3 and that they can have greater success in the marketplace if they are together rather than apart.<\/p>\n on the other hand, culture clashes or differences usually take considerable time before they bubble up to the top of the \u201cwe have an issue\u201d heap. this is why culture compatibility is so important and without it deals fall short of expectations or never see the light of day.<\/p>\n before we take a deep dive into cultural compatibilities and what can be done to deal with potential clashes, culture needs to be defined. to sum it up, a firm\u2019s culture is the accumulation of shared values, beliefs and behaviors that determine how partners and staff carry out day-to-day tasks such as managing and governing the practice, serving clients, and attracting and retaining talent. culture has three key prongs:<\/p>\n we have found that when it comes to determining culture compatibilities, many firms talk a lot about a few cultural similarities as proof of compatibility but cheap culture talk fails to help firms navigate through the difficult task of dealing with potential culture clashes that will help improve outcomes and the probability that a combination will be a win-win.<\/p>\n in our opinion, an assessment of culture compatibilities between the larger firm and a merged-in firm should not be a gloss-over or an afterthought when considering a possible transaction. we believe culture deserves a lot more weight in the due diligence process as a potential transaction is evaluated. our advice is:<\/p>\n here are four questions that might help you assess your due diligence efforts regarding culture:<\/p>\n if you answered yes to any one of these questions, you need to pay more attention to the #1 reason why so many deals fall short of expectations and why so many die at the altar.<\/p>\n cultural integration isn\u2019t something that can wait until after a merger or acquisition is consummated. the top 100 and other fast-growing firms usually flag possible cultural clashes or differences as an integral part of due diligence.<\/p>\n buyers and sellers beware! why did dillinger rob banks? because that is where the money is. why should the larger firm and the merged-in firm make culture due diligence a priority when evaluating a potential transaction? because that\u2019s where most deals fall apart.<\/p>\n","protected":false},"excerpt":{"rendered":"
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\nhaving said that, mergers and acquisitions are a tricky business and are not silver bullets to solving a cpa firm\u2019s problem in achieving sustainable growth. to say the least, these transactions are extremely time-consuming, riddled with \u201csand traps\u201d and full of opportunity costs, but more than that they have considerable risk.<\/p>\n\n
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