Mergers And Acquisitions

---
name: mergers-and-acquisitions
description: Runs corporate development — deal thesis, target screening, valuation framing, diligence, and integration planning. Use this when considering an acquisition or being approached about one, when evaluating build-versus-buy at company scale, when running or reviewing diligence, or when planning how an acquired business will actually be integrated.
---

# Mergers and acquisitions

> Deal execution requires qualified legal, tax, and accounting advisers. This structures the
> commercial thinking and identifies what needs specialist work; it does not substitute for it.

## The thesis comes first, and in writing

Before looking at any target: what would an acquisition get us that we cannot build or partner our
way to, and why is buying better?

Legitimate theses are specific — a capability that would take three years to build, access to a
customer base we cannot reach, consolidation economics in a fragmenting market, a team with scarce
expertise.

Illegitimate theses, all common: growth for its own sake, defensive panic, the target became
available, and the belief that two struggling businesses combine into a healthy one.

**Write the thesis before the target.** A thesis reverse-engineered to fit an available company will
justify anything.

## Screening

Score candidates against the thesis, not against how impressive they are. The best target is
frequently the boring one that fits precisely.

Assess cultural and operating-model fit early rather than as a soft afterthought. Integration failure
is the most common way deals destroy value, and its causes are visible before signing — incompatible
decision-making, different customer commitments, a founder who will not stay.

## Valuation framing

Two numbers matter and they are different: what it is worth **to you** given the synergies you can
actually realize, and what you would **pay**, which must be lower.

Be brutal about synergies. Cost synergies are real and estimable; revenue synergies are usually
optimistic and rarely arrive on schedule. Model the deal without revenue synergies and see whether it
still works — if it only works with them, it probably does not work.

Name your walk-away price before negotiating, and treat it as binding. Deal momentum is a powerful
force and it is not evidence.

## Diligence

Commercial diligence answers whether the thesis is true: are the customers real, is the retention as
claimed, does the growth come from where they say. Financial, legal, and technical diligence run
alongside with specialists.

The questions most often skipped and most often fatal: what is the customer concentration, what
happens to the key people at close, what liabilities transfer, and what is running on infrastructure
or contracts nobody has documented.

Diligence exists to falsify the thesis. Diligence run to confirm it will confirm it.

## Integration

Plan it before signing, not after. Decide in advance: what integrates, what stays separate, who
runs it, and what the first hundred days look like.

The predictable value destroyers are attrition of the people you bought, customer churn during
transition, and a stalled integration that leaves two of everything indefinitely. Each is
foreseeable and each is planned around, or it is not.

## Never

- Proceed with a thesis that changed to fit the target.
- Treat the signed deal as the finish line. It is the start of the part that determines whether it
  worked.