The Importance of Transaction Advisory: Lessons from Business Successes and Failures

Transaction advisory is essential for major business deals, as evidenced by both triumphs and disasters. Advisors help guide strategic decisions and avoid costly mistakes through services like valuation, due diligence and M&A counsel.

Consider Disney acquiring Pixar in 2006 for $7.4 billion. Pixar made blockbusters like Toy Story and became Disney’s most successful film studio. Disney likely relied on advisors to value Pixar, conduct due diligence and negotiate the deal. The result was a massive success, demonstrating the value of expert transaction advisory.

Conversely, Time Warner acquiring AOL in 2000 for $182 billion failed spectacularly. Within a year, the combined company lost $99 billion in value as the tech bubble burst. Lack of advisors contributed to overpaying and botching the risky, ill-conceived deal.?

In 2005, Procter & Gamble acquired Gillette for $57 billion, gaining brands like Braun, Duracell and Gillette. Valued at nearly 2x Gillette’s market cap, the deal was risky but rewarding long-term. Advisors probably assessed the strategic rationale, growth opportunities and cultural fit to convince P&G to go ahead. Fifteen years on, it seems an inspired move demonstrating advisory’s long view.

Compare this to Kraft Heinz buying Unilever in 2017 for $143 billion, unsuccessfully attempting a hostile takeover. If accomplished, it may have burdened Kraft Heinz with massive debt, as Unilever rejected the offer. However, with extensive due diligence advisors could have objectively evaluated the deal and avoided this failure.

In 2000, eBay bought PayPal for $1.5 billion, gaining a payments arm and fuelling its growth into a $36 billion company. EBay likely relied on advisors to spot PayPal’s potential, negotiate the deal and develop an expansion strategy. This showcase success proves great advisory adds exponential value.

Finally, consider WeWork’s failed 2019 IPO that lost SoftBank billions and ousted CEO Adam Neumann. Had WeWork employed advisors, they may have assessed the company as overvalued, lacking viability for public markets. The risky deal may have been restructured or avoided, sparing stakeholders significant losses.

The examples underscore the benefits of?Transaction Advisory Services ?and the risks of not having them. For significant deals, expert counsel from firms like IMC Group offers essential long-term perspectives, objective assessments, and?Due Diligence Services ?that can mean the difference between success and failure. By balancing opportunities and viability, advisors guide businesses to structurally sound, value-generating transactions.