How one approach to M&A is more likely to create value than all others

Programmatic M&A strategies continue to create gains in excess total returns to shareholders, at lower levels of risk.

[Types: programatic, selective, large-deal, or organic]

M&A activity is surging as companies use M&A to manage the still-unpredictable economic effects of the COVID-19 pandemic and find their strategic footing. They are pursuing deals to streamline their assets, establish or extend their digital capabilities, acquire top talent, and otherwise strengthen their competitive positions. None of this is news to those companies that have adopted a through-cycle mindset to M&A; alliances, partnerships, and other transactions have been top of mind for them all along.

What really works when it comes to deal making? Empirical research, that analyzed more than 20 years of data, confirms, once again, that programmatic M&A is the strategy that is most likely to create the most value for companies. That is, carefully choreographing a series of deals around a specific business case or M&A theme—rather than relying on episodic “big bang” transactions—is far more likely than other approaches to lead to stronger performance and less risk.

programmatic M&A is not purely a volume play; it’s a strategy for systematically building new businesses, services, and capabilities. The companies that use a programmatic approach create deal flows linked to their conviction in their corporate strategy, understanding of their competitive advantage, and confidence in their capacity to execute. They manage their growth strategies proactively. And their approach to M&A does not change, regardless of the success or failure of any single deal.

Which M&A strategies create the most value?

Programmatic acquirers, on average, delivered about 2 percent more in excess total returns to shareholders (TRS) annually as compared with their peers. By contrast, none of the other approaches to M&A (organic, selective, big deal) created any excess TRS, on average, for the cohort of companies.

But the following five new pieces of information emerged for the first time.

Finding 1: Organic-growth strategies are now—on average—the worst performing of all M&A approaches
Finding 2: The programmatic approach succeeds across nearly all sectors of the economy
Finding 3: The large-deal approach to M&A does not necessarily destroy value
Finding 4: The programmatic approach can withstand periods of high economic volatility
Finding 5: Changing course remains difficult—most companies stick with the same M&A strategy [ie, change is hard]

What do programmatic acquirers do differently?

M&A is not “an event,” and it is not something that “happens” to a company. It is a capability that is essential for creating outsize value, and like any capability, it requires sufficient attention and resources to grow. decades of research on companies’ M&A approaches and underlying capabilities point to three critical focus areas for success—what we’ve dubbed the three C’s of M&A: competitive advantage, conviction, and capacity. The programmatic acquirers in our research base are particularly adept in each of these areas.

Competitive advantage

  • have clear understanding of their source of competitive advantage
  • aligned on the industry and market trends company wants to pursue
  • understand which assets company needs to acquire to meet the company’s M&A aspirations


Programmatic acquirers are about 1.2 times more likely than their peers to build comprehensive business cases around potential M&A targets. By doing so, they can persuade senior managers and board directors to buy into the deal relatively quickly; they can also create a strong M&A narrative that can be shared with prospective targets, investors, the market, and others.


A company’s ability to execute on its strategy often comes down to whether it has enough financial, talent, and organizational capacity.

  • have the right capabilities (tools and talent) to execute their M&A strategy
  • have clearly defined processes for all dimensions of a due-diligence process (financial, legal/risk, operations, culture, and talent)
  • have a clear process for designing a new, integrated organizational structure

Parting words

These and other data confirm that a programmatic approach to M&A and a focus on the three C’s can lead to outperformance. But the proof is not just in the numbers; it’s in the stories of businesses that have differentiated themselves through their ability to source the deals that align most with their overall corporate strategy—and to act quickly because of the knowledge, infrastructures, and capabilities they have built up around M&A.

Leave a Comment

Your email address will not be published. Required fields are marked *