M&A strategy of many smaller deals less risky than organic growth

Having analyzed the world’s top 1,000 nonbanking companies over the past decade, McKinsey reveal distinct patterns of deal making.

The most frequent factors, such as industry structure, the match of an asset with a well-articulated strategy, and the execution capabilities required to realize value, are as relevant as ever.

Further more, returns by M&A approach are widely distributed and can obscure individual results, but the general implication is that across most industries, companies with the right capabilities can succeed with a pattern of smaller deals. In large deals, industry structure plays as much of a role in success as the capabilities of a company and its leadership.

Interestingly enough, given the right skills and strategy – a strategy that will most likely cover many deals representing a high share of the market capitalization – McKinsey found that a growth built around a series of small M&As may be less risky than any organic growth. http://goo.gl/FmeSd