Improving M&A Value Capture
Enhancing current and future integration value realization by institutionalizing integration learnings
By Susan Cypra, Peter Lang, John Greenaway, Lauren Hawks

2009: An abundance of M&A opportunities
The credit crisis is providing an abundance of M&A opportunities in certain sectors. Many technology and life sciences industry players have entered 2009 with substantial cash reserves, and in many cases have indicated their intent to buy. In a January 9 interview, Cisco CEO John Chambers announced intentions to utilize $27 billion in current assets for M&A, stating, “Companies with cash are the king, queen and royal family [of the current market].” [2] On January 20, Johnson & Johnson Chief Executive William Weldon similarly announced, “This economic environment creates opportunities we may never see again, so we need to be in a position to go after them.”[3]

While today’s potential for value-priced transactions is enticing, buyers must not lose sight of the importance of well-developed and executed integration plans as a significant differentiator between successful and failed value capture. As Warren Hellman, former head of Lehman Brothers once recalled, “So many mergers fail to deliver what they promise that there should be a presumption of failure. The burden of proof should be on showing that anything really good is likely to come out of one.”[4]

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[1] Global PMI Survey: Datastream
[2] CES: A Chat with Cisco CEO John Chambers,” Barrons.com, Eric Savitz, January 9, 2009
[3] J&J Sales Show Healthcare Feels the Pinch,” The Wall Street Journal, Peter Loftus and Shirley S. Wang, January 21, 2009
[4] “The Measurement of Post- Acquisition Performance: Toward a Value-Based Benchmarking Methodology,” by Mark L. Sirower, New York University and Stepehn F. O’ Byne, Shareholder Value Advisors, Inc., 1997