To provide a template for creating shareholder value through successful mergers and acquisitions (M&A) practices.
Taking as an example the merger between Ameritrade Holding Corporation and Datek Online Holdings Corp. in 2002, this paper provides a template for clearly and transparently communicating with shareholders and potential shareholders the value creation so the company can get credit for its M&A success in its stock price.
Outlining a template can create consistency, discipline and transparency around the creation of shareholder value during M&As.
Other publications have documented reasons why M&As fail including: companies overpaying, the integration failing to overcome cultural conflicts, poor integration processes being used, resource constraints, etc. This article doesn't cover that. This article walks through a simple template for companies to follow when measuring shareholder value creation from a M&A.
It is more than just the fact that most M&As fail to realize the promised value. To be successful, deal makers must have a simple, transparent and disciplined approach to measuring the shareholder value creation. This paper offers guidelines for this approach.
