Digital M&A presents non-traditional concerns, higher premiums and cultural integration risk, according a recent Bain Brief, which summarizes an executive survey. The executives agreed that the digital strategy needs to be a clear part of the corporate strategy. Half of them noted the need for expertise at hand before the deal and the importance of the acquirer adapting its culture to preserve the target’s culture. Bain argues that a one-off digital acquisition is less useful for TSR than multiple “frequent and material acquisitions,” especially given the higher premiums in the digital space. The piece presents recommendations on: M&A Strategy, Corporate Financing, Due Diligence, and Merger Integration.
As digital continues to transform different industries, the concerns raised by Bain will likely become the new norm. Corporate Strategy has a critical role to play in terms of capturing the digital strategy within the larger strategy and helping align the conversations that will be necessary not only to execute a deal but ensure that the culture of the target company can continue to flourish.