- Published: 12 March 2012
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Business Acumen and behavioral strategy can predict and improve merger outcome
There is a Critical Need for M&A Outcomes to be Predicted and Improved
Traditionally M&A outcomes have been terrible and so has the record of predicting them. “Insanity is doing the same thing over and over again and expecting different results.”
Traditional M&A Analysis Ignores Non-Rational Behavior
Behavioral disciplines address non-rational behaviors but still can’t predict merger outcomes.
New Form of Behavioral Analysis Allows Prediction of M&A Outcomes
The fundamental principle is that all cognitive biases have financial consequences. The model shows how behaviors impact both business operating outcomes and financial and valuation outcomes.
Behavioral Alignment is Critical to M&A Outcome
Financial culture drives valuation outcome. Financial styles must be identified and understood for a successful merger.
We Can Use This to Improve M&A Success Rates
The method, Behaviorally-Based Merging, or BBM, can be used to construct a new behavioral proforma. It is also used to architect the combined management team so that it matches the target valuation of the combined entity.