Every company wants to evolve and grow its business, and M&A is one of the fastest and most powerful ways to grow. If done correctly, M&A can transform an organization overnight but there must be a sound M&A thesis. Without an M&A thesis, acquirers might end up wasting time, money, and opportunities. In this article, Siran Tanielyan, SVP, Corporate Development at Paramount, will discuss developing an M&A thesis.
"An M&A thesis is a by-product of consistent conversations with the C-suite, business unit leaders, and continued assessment of the available assets." - Siran Tanielyan
An M&A thesis is corporate development’s formal projection of where a specific area in the company can use M&A to accelerate the corporate strategy. The M&A thesis should answer three questions:
Often, corporate development cannot answer these questions. They must spend time with the business leaders, technology team, and product team to identify existing gaps.
Corporate development's role is to determine the organization's capabilities and how the capabilities can achieve the overall strategy. Here are the steps to building an M&A thesis:
If successful, corporate development is now in a position where they can proactively pursue deals to help achieve the corporate strategy.
The biggest challenge when developing an M&A thesis is getting the commitment and bandwidth of the business unit leaders. Creating a thesis and working through lists of companies takes time. Understand that business leaders have day jobs and other priorities. Getting their attention and commitment is a constant struggle that most corporate development teams face.
Corporate development must develop a strong relationship with the business leaders if the company wants to be proactive in M&A.