The Value Killers

1. Front Matter

   Pages i-xviii

   PDF

2. Don’t Rely on Investment Banks for Valuation

   • Nuno Fernandes

   Pages 1-14

3. Avoid “Strategic” Deals

   • Nuno Fernandes

   Pages 15-30

4. Link the Before and After

   • Nuno Fernandes

   Pages 31-49

5. Think Like a Financial Investor

   • Nuno Fernandes

   Pages 51-70

6. Move Fast and Communicate Transparently

   • Nuno Fernandes

   Pages 71-78

7. Conclusion: Closing the Deal, But at What Price?

   • Nuno Fernandes

   Pages 79-83

8. Back Matter

   Pages 85-88

   PDF

In a business climate marked by escalating global competition and industry disruption, successful mergers and acquisitions are increasingly vital to the growth and profitability of many corporations. If history is any guide, 60 to 70 per cent of new mergers will fail – and will destroy shareholder value. To date, analyses of the M&A failure rate tend to focus on individual causes – e.g., culture clashes, valuation methods, or CEO overconfidence – rather than examining the problem holistically. The Value Killers is the first book based on a holistic analysis of successful and unsuccessful transactions. Based on research, interviews with top executives, and case studies, this book identifies the key causes of failures and successes and offers prescriptions to increase the odds that future transactions will deliver all the anticipated synergies. 

The Value Killers offers practical advice in the form of 5 Golden Rules. These rules will help managers and boards to ensure that target companies are properly valued; potential synergies and risks are identified in advance; checks and balances are installed to make sure that the pros and cons of the transaction are rationally and objectively evaluated; mechanisms are created that will trigger termination of bad deals; and obstacles to successful post-merger integrations are assessed (and solutions developed) before the deal closes. Each chapter includes questions for executives considering future M&As to allow them to see whether they are on the right track or not. 

• mergers
• acquisitions
• M&A
• Valuation
• Mergers and Acquisitions
• Corporate Restructurings
• corporate finance
• investment banking

“We all ‘know’ M&A can destroy value. And we continue to pursue deals. Professor Fernandes has succeeded in bringing together excellent and tangible experience and advice from an impressively wide range of sectors that can help break this cycle and ensure you create real value. This book could be your best investment, as long as you are buying before you deal....” (Simon Henry, Director, Rio Tinto plc, Lloyds Banking Group plc, PetroChina Ltd; former CFO, Royal Dutch Shell)

“M&As are a very tempting path to growth, but research shows that more often than not reality falls short of the promise. The Value Killers identifies five major challenges and proposes insightful and actionable ways to overcome these challenges. Grounded in research and full of practical examples, this very well-written book is a must read!” (Jean-François Manzoni, President and Nestlé Professor, International Institute for Management Development (IMD))

“This book is a ‘killer’ for the conventional leaders who hide behind the M&A tool showing growth and shining while effectively destroying value. The do’s and don’ts of M&As are exposed here, simply, but bluntly, by Professor Nuno Fernandes, on the back of his very strong academic background coupled with his practical and long professional experience.” (Karim Karoui, Group Head of Subsidiaries, Strategy & Transformation, First Abu Dhabi Bank (UAE); former CFO, First Gulf Bank)

“Nuno Fernandes provides a thorough and readable summary of the key drivers for successful deals. He builds on a large body of empirical research to highlight the main reasons why corporate mergers, despite their prevalence in the corporate world, seldom end up generating value. This book is a must-read for managers considering growth through M&As if they hope to succeed.” (José Manuel Campa, President, European Banking Authority)

• Lisbon, Portugal

  Nuno Fernandes

Nuno Fernandes is Full Professor of Finance at IESE Business School, Spain. He is also a research associate of the European Corporate Governance Institute (ECGI), and the Chairman of the Board of Auditors of the Portuguese Central Bank (Banco de Portugal). Prior to joining IESE, he was the Dean of Católica Lisbon School of Business and Economics. In addition, he was, for a decade, Professor of Finance at IMD (Lausanne, Switzerland). At IMD, Professor Fernandes directed the Strategic Finance program, among other customized programs for leading international companies. He was also a member of the Advisory Committee for the World Economic Forum, and a Visiting Scholar at Columbia Business School (New York). A specialist in corporate finance, international financial markets, and emerging market risks, Fernandes has been published in leading international academic journals, including the Journal of Financial Economics, Review of Financial Studies, Journal of International Business Studies, and the Journal of Portfolio Management. He speaks at business conferences in Asia, Europe, and North America, and is a regular contributor to The Financial Times and The Wall Street Journal. Fernandes advises companies and financial institutions in Asia, Europe, Latin America, and the Middle East on formulating winning financial strategies, investments, international valuations, M&As, and risk management. His work has earned recognition that includes the AEFIN prize and a grant from the FDIC (the U.S. regulator for financial institutions). In 2008, he received the Lamfalussy Fellowship from the European Central Bank.

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