Global merger and acquisition deal value reached $4.7 trillion in 2025, as reported by McKinsey. It shows how companies around the world are using mergers and acquisitions as tool for growing and building strategic capabilities. But here’s another finding. KPMG has reported that only 42.8 percent deals succeeded in unlocking synergies in mergers and acquisitions and 57.2 percent destroyed shareholder value. It highlights why having well-planned merger and acquisition strategy is critical for realizing expected value from the deal.
A well-planned merger and acquisition strategy clearly defines the deal intent and outlines how it will create value. This article explains how an effective merger and acquisition strategy could benefit your business and help you realize the intended value from your merger and acquisition deal.
What is Merger and Acquisition Strategy?
A mergers and acquisitions (M&A) strategy is a plan that guides company’s decision to merge with or acquire another business. It mainly acts as growth tool that helps businesses in expanding their footprint and saving costs. Businesses pursue it for gaining competitive edge or to increase their revenue.
However mergers and acquisitions are different types of transactions. Difference between mergers and acquisitions is explained below:
What Is a Merger in Business?
Merger involves combining two businesses in one organization. Business mergers bring two businesses together including their operations and resources for creating stronger organization. It often results in increased market share due to expanded capabilities.
In 2025, Baker Tilly and Moss Adams merged and created sixth-largest U.S. accounting firm- generating more than $3 billion in revenue in 2024 and aiming for $6 billion annually by 2030- Wall Street Journal.
What Is an Acquisition in Business?
Business acquisition deal involves purchasing part or all of another business for gaining control over its operations and assets or shares. Acquisition is different from merger as both businesses may not necessarily become one legal entity. Acquisition intent remains expanding market presence to accelerate growth or gaining new capabilities.
Brave Bison acquired MTM for £12 million, resulting in revenue rise by 19 percent and share price rising 67 percent in same acquisition year.
Such successful acquisition decisions require careful financial planning and valuation. Fractional CFO in such case could support businesses with financial analysis and deal valuation so they could determine if an acquisition is financially viable for them or not.
Why Do Companies Merge or Acquire Other Businesses?
Companies pursue mergers and acquisitions as a growth strategy. There could be different reasons for mergers and acquisitions. Like, M&A deals may aim at expanding revenue, reducing costs, gaining competitive edge, and/or gaining unique strategic capabilities and resources. M&A deals also create opportunities for unlocking and realizing value through smaller and mid-sized transactions. It allows business owners to leverage strategic opportunities without depending only on large scale deals.
Recently, Infinx acquired i3 Verticals’ healthcare RCM business for $96 million, gaining proprietary technology and expanding presence in U.S academic medical centers. It shows how businesses unlock strategic value through focused deals.
Reasons for M&A decision could be many but most deals are driven by following motives:
How Can M&A Accelerate Business Growth?
Up till now, we have discussed that businesses can facilitate growth through mergers and acquisitions. Now we will discuss exactly how it happens? M&A provides business an already established platform for building instead of starting from scratch. Take real example- Alex acquired e-commerce business and grew it to $2.4 million run rate. It shows how acquiring an existing platform could help growing faster than only depending on organic expansion.
M&A vs. Organic Growth: Which Is Right for Your Business?
Whether to go for organic growth or grow through merger and acquisition that is considerably faster route, you have to make trade-offs and keep your strategic intentions clear. Following table explains difference in both growth approaches:
| Factor | Organic Growth | M&A Growth |
| Speed | Gradual growth | Faster scale |
| Risk | Lower risk | Higher execution risk |
| Capital | Usually lower investment | Higher upfront funding |
| Management | Steady focus | Greater management demands |
| Growth source | Build internally | Acquire existing business |
Making right choice means understanding your financial position and planning for future growth and these are areas where Virtual CFO could offer valuable guidance.
What Are Different Types of Mergers and Acquisitions?
Business mergers and acquisitions could be of different types depending on deal purpose and business nature. Businesses merge/acquire horizontally (two competitors) or vertically (such as manufacturer and supplier). It could also be conglomerate merger (such as food company acquiring media business) or deal may involve asset acquisition- each deal serving unique purpose.
What Is a Horizontal Merger?
Horizontal merger occurs when two businesses that operate in same industry and at similar stage of the supply chain merge. For example, there could be two competing retailers who may expand their customer base and market reach for gaining economies of scale or pooling their resources and capabilities.
A 2026 study found horizontal deals made around 50 percent of deal numbers and transaction value in sample of 1,918 M&A transactions. It shows how common this strategy is among businesses pursuing growth objectives.
What Is a Vertical Merger?
Vertical merger occurs when businesses at different stages from same supply chain merge. A real example is how EQT merged with Equitrans Midstream by combining natural-gas production with pipeline transportation, creating vertically integrated energy business- PR Newswire.
What Is a Conglomerate Merger?
Conglomerate mergers occur when businesses that operate in different industries combine to diversify operations. For example, Disney merged with Capital Cities that brought an entertainment company together with broadcasting and publishing business.
What Is an Asset Acquisition?
Asset acquisition involves purchase of specific assets of other business instead of acquiring whole business. To understand better, Google acquired HTC’s smartphone team for $1.1 billion in 2018. It allowed Google to gain technology and talent without acquiring HTC’s whole business- Forbes.
What Are the Benefits of Mergers and Acquisitions?
Mergers and acquisitions could create value by allowing businesses to expand faster, reduce costs, increase revenue, strengthen competitive position, and build strategic capabilities. These benefits are explained below:
How Can M&A Help Companies Enter New Markets Faster?
M&A could help businesses in entering new markets without needing to build customer base or distribution network of their own. Uber acquired Careem and took advantage of its established presence in Middle East, gaining access to local customer and drivers and most importantly- market knowledge- CNN reported.
How Can Mergers and Acquisitions Reduce Costs?
Mergers and acquisition deals could reduce costs by creating economies of scale and removing duplicate functions. Omnicom merged with Interpublic Group in 2025 and it doubled its cost-synergy target to $1.5 billion over 30 months due to greater scale and by eliminating overlapping operations.
Here is an example of synergies in mergers and acquisitions deal completed by Omnicom:
Source: Omnicom
Realizing these cost savings requires ongoing financial oversight for tracking performance. You have to forecast cashflow and regularly monitor if expected efficiencies are translating to measurable results. You can take part time CFO services for this purpose without hiring full time CFO for your business.
How Can M&A Increase Revenue and Strengthen Competitive Position?
Merger and acquisitions increase revenue by adding complementary products and creating cross-selling opportunities. It also helps in gaining unique competitive positioning in the market through enhanced market influence and capabilities.
Here are some examples of mergers and acquisitions that show substantial revenue gains:
| M&A Deal | Revenue / Financial Statistic |
| Broadcom + VMware (2023) | Revenue reached $51.6 billion in 2024 up 44 percent |
| Microsoft + Activision Blizzard (2023) | Activision contributed $5.7 billion revenue post-acquisition |
| Aon + NFP (2024) | NFP contributed $1.7 billion revenue post-acquisition |
| CSL + Vifor (2022) | Vifor contributed $2.13 billion revenue post-acquisition |
Can M&A Increase a Company’s Business Valuation?
M&A increases business valuation by developing strategic capabilities that strengthen market position. For example, Microsoft acquired LinkedIn that expanded its professional network and B2B sales capabilities. LinkedIn’s revenue reached $17.8 billion post-acquisition and membership surpassed 1.2 billion.
Following graph shows that increase in business valuation is among the top motives for doing M&A deal:
Source: Good Firms
Although merger and acquisition help in building strategic capabilities. However, businesses must evaluate if these capabilities could translate to higher business value as well. For this purpose, they need robust valuation and financial modelling. Fractional CFO services could help them in providing specialist support.
What Makes an M&A Strategy Successful?
There is no single factor or a set of factors that make recipe for successful merger and acquisition deal. Business must have a clear identifiable target with clear strategic objectives. Valuation must be realistic and integration planning should remain disciplined. Doing this could help in managing financial and operational risks and converting expected benefits of merger acquisition to measurable business value.
Why Is Financial Due Diligence Important in M&A?
Financial due diligence helps businesses in understanding true financial condition of target company before merging or acquiring it. Assessing due diligence involves checking financial statements thoroughly for identifying potentially hidden risks. It also involves testing if assumptions about revenue/costing and growth are realistic. This information is important for deciding if the potential deal is financially viable.
How Does Valuation Affect Success of an Acquisition?
If you pay too much for merger/acquisition deal, then it could destroy value that could be realized from acquisition. Valuation should therefore reflect target’s earnings and future cashflows. Overly optimistic growth projections should be avoided. Important lesson could be learned from Ericsson who acquired Vonage for $6.2 billion in 2021. By 2024, Ericsson wrote down $4 billion that was around two third of purchase price. It failed materializing expected earnings from acquisition deal.
This is where professional M&A support could help businesses in assessing valuation and challenging financial assumptions so they could determine if proposed deal price is justified before they proceed.
Why Is Post-Merger Integration Important?
When two businesses merge or acquire each other, it requires more than bringing them under single ownership structure. Effective integration requires alignment between systems and people and processes. When integration is handled efficiently, it helps businesses in avoiding operational disruptions and ensuring expected synergies are actually realized after the deal.
During this transition, businesses at times need additional financial oversight for managing integration costs and maintaining accurate reporting. An Interim CFO can provide this support while combined business strives for operational stability.
How Kaizen CFO Services Supports M&A Strategy
Kaizen CFO services offer M&A financial support across different merger and acquisition stages. M&A support helps businesses with financial planning and deal analysis. Fractional CFO services offer strategic financial leadership for valuation and modelling. Virtual CFO services support businesses in cashflow management and forecasting. Interim CFO services could help during transition and integration. Businesses could also take part time CFO services for monitoring performance and costs as they undergo merger and acquisition deal.
Ready to Strengthen Your M&A Strategy?
Are you planning an acquisition or evaluating potential target? Or maybe you are preparing for post-merger integration? Kaizen CFO Services provide financial expertise needed for evaluating opportunities and navigating transition with greater confidence. You may explore Kaizen’s M&A Support to discuss your requirements and take next step.
