M&A Success Is No Longer the Exception—It’s the Rule Why Bolt-On Acquisitions Are Thriving in Today's Business Environment

When it comes to M&A, the game has changed. Years ago, most mergers were a gamble, with the odds stacked against success. In fact, back in the early 2000s, 70% of mergers and acquisitions were failures. Companies spent billions chasing growth through deals that ultimately collapsed under their own weight. But fast forward to today, and we're seeing something remarkable—70% of mergers are succeeding. This isn't just a flip of the coin; this is the result of a strategic shift in how companies are approaching M&A.

This success is particularly notable when you look at bolt-on acquisitions—smaller deals that add complementary businesses or capabilities to a core platform. These types of acquisitions, once considered risky, are thriving. But why? What’s changed?

1. The Playbook Has Expanded Beyond Cost-Cutting

Back in the day, M&A was largely a scale game. Companies were targeting competitors in the same industry, hoping to grow their footprint, cut costs, and dominate markets. It worked—for a while. But here’s the problem: you can only cut costs so far before you hit a wall. Today’s companies are thinking beyond that narrow focus. They’re using M&A to expand into new markets, acquire cutting-edge technology, or gain new capabilities like AI and data analytics.

Think about it—companies aren’t just buying competitors anymore. They’re acquiring innovative startups, emerging tech firms, and even businesses in entirely different sectors to future-proof their operations. This broader approach to M&A is why bolt-on acquisitions are becoming more common and more successful.

According to United Effects, aligning strategic goals is key in bolt-on acquisitions. These deals allow companies to access new markets, combine technologies, and multiply strengths, leading to greater customer satisfaction and operational efficiencies

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2. Due Diligence Is Smarter Than Ever

One of the biggest reasons deals failed in the past? Sloppy due diligence. Companies would run the numbers, shake hands, and hope for the best. That’s not how it works anymore. The best acquirers today have adopted a more sophisticated due diligence process. They aren’t just looking at spreadsheets; they’re assessing cultural fit, leadership capabilities, and how well the people within the target company will adapt to their new environment.

Today, companies are expanding their due diligence beyond financials to include cultural assessments, talent reviews, and even social media analysis. This added layer of intelligence helps businesses avoid the "culture clash" that used to derail so many integrations

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3. Experience Is the Best Teacher

M&A isn’t something you do once and master. The companies that are winning today are the ones that have built M&A into their long-term strategy. They’ve developed a rhythm. As Bain’s research shows, the more deals a company does, the better they get at it. Companies that make frequent, smaller acquisitions—like bolt-on deals—are quickly becoming experts at seamlessly integrating new businesses

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Look at what’s happening in Silicon Valley: companies like Facebook and Amazon are constantly doing smaller, strategic acquisitions. They’re not looking for fixer-uppers—they’re looking for businesses that can plug into their operations and scale quickly. They’re focused on speed, synergy, and strategic growth, and it’s working.

4. Integration Is Finally Getting the Attention It Deserves

M&A has always been hard. Integrating two companies—whether it’s systems, people, or processes—is an enormous task. But in the past, it was often treated as an afterthought. Deals were done, and then leaders would try to figure out how to make it all work. Unsurprisingly, it rarely did.

Today, companies understand that integration is where the real value of a deal is realized. Thanks to new tools, methodologies like Agile, and advances in technology, integration is no longer the headache it once was. Businesses now have entire teams dedicated to making sure the integration process runs smoothly, from pre-deal planning all the way through post-deal execution

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Companies that focus on people and process integration are the ones that are winning. Whether it’s talent assessment or systems harmonization, the tools we have today allow companies to avoid the pitfalls of the past.

A Personal Experience: Helping Acquirers and Acquirees Navigate Integration

I’ve had the privilege of working closely with both acquirers and acquirees to ensure that the people, process, and technology components of the integration are aligned and running smoothly. Recently, I worked with a U.S.-based company that acquired a smaller Greek firm. As a player-coach, my role was to help the acquired team navigate the much larger landscape of the parent company, while keeping both sides aligned with the M&A value goals.

The success of this acquisition wasn’t just about strategy or technology—it was about guiding the people involved and helping them adjust to the new company culture, systems, and expectations. When both the acquirer and the acquired teams understand the bigger picture and work toward common goals, that’s when M&A success happens.

The Path Forward: M&A as a Growth Strategy

We’re entering an era where M&A isn’t a risky bet—it’s a key driver of growth. But here’s the thing: it’s not just about the big deals anymore. The companies that are thriving are the ones making frequent, smaller acquisitions—bolt-on deals that fit neatly into their strategic vision. They’re thinking bigger by going smaller. And they’re seeing the results.

If you’re navigating the complex world of M&A or want guidance on integrating an acquisition smoothly, let’s connect. I’m offering a free 45-minute discovery call where we can discuss your challenges and how I might help you achieve success. Schedule your call here: https://calendly.com/kengavranovic/45-minutes-software-product-discovery-call-clone?preview_source=et_card&month=2024-10