When Considering a Merger, Ask Why

Brian Chapman and Matt Scheitlin

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Mergers and acquisitions are at an all-time high in 2015. There are many reasons why this is happening – companies are buying to increase their heft in contracting, fill an innovation deficit, reshape a portfolio, smooth out cash flows, and even manage a tax bill.

In an industry where most start-ups are funded expressly to sell their innovations to bigger companies and cash out, and where big players merge and grow to protect themselves from becoming a target, it is useful to decode: why do we buy?

We have seen too many mergers fail to create value for the acquiring company. Of course companies sometimes overpay or get locked in an egotistical bidding war to acquire in moments when, ideally, cooler heads would prevail. But those aren’t the most interesting cases. More useful is to examine the mergers where the companies lost sight of the reason they set out to acquire in the first place.

We believe it is critically important to keep the reason for the acquisition firmly in mind when considering the future commercial model. We know that M&A is critical to the healthy function of our industry. But better understanding of the drivers is an essential piece to driving better outcomes.

About the Experts

Brian Chapman is a Principal in ZS’s Evanston, Ill. office and leads the consulting practice for ZS’s Medical Products and Services team. While at ZS, he has worked with companies on a range of sales and marketing issues, including sales force effectiveness, organizational design, opportunity assessment, channel design, new product launch strategy, value proposition development, territory alignment, and incentive compensation. Having spent several years working and living in Europe and Asia, Brian focuses on both U.S. and global projects. Prior to ZS, Brian worked in the chemical industry in a variety of technical and commercial roles. Brian has a B.S. in chemical engineering from Michigan Technological University and an M.B.A. with distinction from University of Michigan’s Ross School of Business.

Matt Scheitlin is a Manager with ZS Associates and is based in the London office. He has nine years of experience with ZS and has worked extensively in the European, U.S. and Asian markets. While at ZS, Matt has focused on the medical technology industry. He has expertise in solving a wide range of sales and marketing challenges – with a particular focus on global opportunity assessment, go-to-market strategy, and sales force effectiveness. Matt received his B.S. in finance with high honors from the University of Illinois at Champaign-Urbana.