Should shareholders insist on specialised advisers in M&A deals?
Using M&As as a pathway to growth comes with significant challenges
Accumulating wealth is intrinsic to humanity, and businesses are the vanguard of wealth creation. In his 1776 book The Wealth of Nations, Adam Smith thrusts forward the concept of “division of labour and specialisation” as the primary driver of wealth creation. A cursory examination of the way businesses accomplish tasks in organised rivalry suggests specialisation is palpable, and the business advisory service is no exception. Here, specialisation translates into a “narrow-scope” strategy reflecting core competencies that help clients accelerate efficiency. Anecdotal evidence also indicates many merger and acquisition (M&A) teams in investments banks are industry focused. Such specialisation can help an investment bank provide high-quality services to its clients. But what does that mean for acquiring firms in M&A deals? At the heart of question is the thought that top executives go on empire-building excursions in M&A deals that may have little, if anything, to do with maximising ...
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