M&A Science How to Validate the Deal Thesis To Ensure M&A Success
Sep 30, 2024
Jann Lau, a Senior Director of Corporate Development at PayPal, dives into the art of validating the deal thesis in M&A. He emphasizes that a strong thesis isn't just about strategic rationale—rigorous validation of assumptions is essential. Listeners learn the risks of hasty deals and the importance of aligning M&A efforts with long-term corporate goals. Jann also discusses how to present theses to executives, navigate integration challenges, and the critical role of due diligence in avoiding pitfalls.
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Yahoo! Acquisition Rollercoaster
- Jann Lau recounts the Yahoo! acquisition by Verizon, a complex deal involving a $5 billion purchase price and a $40 billion equity stake.
- Post-signing, a massive data breach forced a $350 million discount, and integration delays hindered synergy capture, ultimately leading to a divestiture.
Pre-Deal Thesis Essentials
- Define your M&A strategy and explore alternatives like building or partnering before crafting a deal thesis.
- Clarify what you seek to acquire and ensure it aligns with your overall goals.
Corp Dev's True Role
- Corporate development's role is to evaluate strategic alternatives, not solely pursue M&A.
- Deals often fail due to a lack of clear end-to-end accountability and post-close ownership.