In the early 2000s, studies showed that 60% of M&As failed to generate the expected returns. Surprisingly, 20 years later, companies that made recurring acquisitions delivered returns, on average, 130% higher than those that stayed out of the market—as revealed in a recent article by Bain & Company.

What did these companies do differently?

According to Bain & Company, four key factors were consistently improved by the best buyers:

1. Scope Expansion:

Companies like Cisco, Comcast, and Bank of America have expanded their capabilities and geographically, shifting their focus from defense and cost to growth and offense.

2. More Sophisticated Diligence:

Cultural assessments and new techniques, such as web scraping and expert networks, have become essential to successful mergers.

3. Transaction Frequency:

Experience is crucial in M&A. Companies that make frequent acquisitions see more than double the returns of non-acquirers. Those that make five or more acquisitions annually see an additional 20% increase in returns.

4. Frequency, not Size:

Large, one-off deals are risky and often fail. The best strategy has been to focus on smaller, frequent acquisitions.

Read the full article from Bain & Company: https://lnkd.in/d7gzTGE7.