Deloitte: Debunking M&A myths

Deloitte LLP, which is over 100 years old, has built a wealth of knowledge. In fact, last year the firm posted $9.85 billion in revenues.

Well, Deloitte has put together an interesting series of small pieces – called Straight Talk guides. The goal is to help companies "rely less on guesses."

The guide that caught my attention was "M&A Lies, and Why They're Sometimes True." It's a quick read but has some valuable insights.

Keep in mind that – according to various studies – roughly half of M&A deals fail. That's certainly daunting.

But, this doesn't mean that companies should forgo deals. Rather, many companies have been particularly good at M&A, such as Cisco (NASDAQ: CSCO).

Some of the pieces of Deloitte's advice include:

• Don't get caught up in deal fever. After all, investment bankers can push hard (and they are incentivized to do so). Thus, if you detect some serious problems, slow things down – and perhaps even walk from the deal.
• Buying a company is fairly straight forward; integration, on the other hand, can be extremely complex. In other words, as you are putting together the deal, make sure you are also planning for the post-sale activities. Actually, one of the biggest issues is forgetting about customers (one study shows that customer neglect can result in a 50% drop-off in revenues after four years).
• You need to make sure you see good deals. To this end, it's important to cultivate relationships with various players, such as deal attorneys, CPAs and investment bankers.
• Taxes matter. Can you find ways to lower the tax burden?

So, to get the ebook, you can go to the Deloitte site.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.