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Programmatic M&A 101: The Key To Creating Value in 2022 & Beyond?

While the benefits of a programmatic approach to mergers and acquisitions are nothing new, the recent numbers touted by companies who practice this approach are quite impressive. McKinsey & Company recently reported in its McKinsey Quarterly that deal value “rose more than 300 percent in the first half of 2021 compared with the first half of 2020.” Moreover, the COVID-19 pandemic did not dampen the spirits and success rates of these M&A players. Additional research, both current and past, supports the claim that programmatic M&A is a very successful way to capture synergies and extract deal value. Below we provide an overview of the basics of programmatic M&A. 

What is Programmatic M&A?

Programmatic M&A involves the strategy of planning a series of deals around a specific case or theme (essentially a strategic serial acquirer). This approach is contrasted with large, less frequent deals. Companies that follow a programmatic approach think about M&A on a daily basis. In addition, programmatic M&A focuses on, and leverages, the power of relationships and partnerships while trying to develop new services and products. 

What Are the Benefits of Programmatic M&A?

  1. Higher shareholder return
  2. Outperforms organic growth strategies
  3. Less risky than organic growth strategies
  4. Reliable during times of economic downturn and uncertainty (i.e. COVID-19 pandemic)
  5. Proven successful in all sectors

Best Practices From Programmatic Practitioners:

  1. Define your goals
  2. Build an end-to-end M&A process - have a systematic approach
  3. Define and communicate your company’s strengths and ability to execute deals
  4. Leverage technology to help you compare targets, organize and share key data, and move methodically and efficiently through due diligence 
  5. Prioritize culture when deal sourcing 
  6. Begin integration planning early (while you’re completing due diligence) 

Ultimately, linking your company’s specific goals and assets to your deal process and maintaining a proactive approach to inorganic growth are essential components of a robust programmatic approach. 

 

Final Thoughts: 

Currently, there is an abundance of opportunity in the marketplace for serial acquirers, whether they are utilizing a tuck-in, roll-up, or serial strategy. M&A Platforms like Midaxo are the ideal option for the serial acquirer. In fact, 40% of Midaxo users are on multiyear plans, suggesting a trend of serial versus transformational acquisitions. In the end, companies embracing programmatic M&A can leverage their core competencies and strategies to identify and create opportunities for effective inorganic growth and positive deal value. 

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