Unlocking Value with Programmatic M&A

Written by
Guido Steenbergen
Table of Contents

Mergers and acquisitions (M&A) globally shape a multi-billion dollar industry that drives corporate transformations and market dynamics. Companies are constantly scouting for new acquisitions, attempting to find a target that closely aligns with their strategic objectives. 

In the world of mergers and acquisitions (M&A), traditional strategies like organic M&A have been the go-to for many years. They have served businesses well, but recently, a noticeable shift has emerged. According to a study by McKinsey there is a growing preference for programmatic M&A. The study shows that companies employing this strategy had a median excess return of 2.1% over ten years, significantly outperforming their peers. This approach is seen as a proactive and more effective way of pursuing M&A deals, marking a significant departure from traditional methods.

At Venture IQ, we want to help you to get the most out of your M&A practices. This article dives deeper into what programmatic M&A is, how it can help you in your M&A process, and how Venture IQ can assist you in implementing it most effectively. 

What is programmatic M&A?

Traditionally, there have been three approaches to growth within companies. One of the oldest and most traditional approaches is organic growth. Within this approach, companies use internal resources to facilitate growth, barely engaging in any M&A. However, some executives saw the advantages of M&A, which traditionally entails faster growth for the acquirer. They started to engage in selective M&A, a process whereby the company acquires one or two smaller companies a year. 

In the beginning, the companies acquired were often smaller, but over the years larger acquisitions have become much more common. With multibillion-dollar acquisitions like Facebook buying Instagram, or Microsoft buying Activision. But, according to McKinsey’s research, these types of M&A have become less effective over the past years, and a new and more effective approach is needed. This approach is programmatic M&A.

Programmatic M&A redefines growth, echoing the dynamic 'buy and build' strategies of leading private equity firms, reshaping their portfolios with precision and agility. Opposite of the traditional process, which mostly involves acquiring one or two larger companies a year, programmatic M&A involves the systematic execution of a series of smaller, thematically linked deals, as opposed to one monumental transaction. 

What are the benefits of programmatic M&A?

But what makes programmatic M&A so revolutionary, and how does it turn the tides of risk and reward in favor of the acquirer? The process of programmatic M&A can unlock several advantages to the acquirer, including: 

  1. Risk mitigation: Companies engaging in programmatic M&A tend to have a lower risk of failed acquisitions, because of the increase in diversification and stabilization effects brought about by multiple acquisitions. According to an article in Harvard Business Review, diversifying by acquiring a company in a related market can reduce its technological, production, or marketing risks, amongst others. 
  2. Strategic growth acceleration: The programmatic approach to M&A allows for rapid scaling of the acquirer through numerous smaller acquisitions in contrast to the slower integration process typically seen in larger acquisitions, like the Adobe acquisition of Figma. A process that had been going on for nearly two years and was canceled on December 18th, 2023 due to regulatory issues
  3. Focused approach: Programmatic M&A enables a more targeted strategy, tailor-made for specific market needs and corporate objectives. According to one of our Co-Founders, Alexander van OS, investments often go wrong because of incomplete information on targets and their fit within the acquirers' objectives. Programmatic M&A with a clearly defined strategy can solve these problems. 

Key success factors in programmatic M&A

To maximize the potential of programmatic M&A and reap all the benefits discussed earlier, acquirers need to engage in certain essential practices. First of all, companies need to cultivate a reputation as collaborative and strategic partners in the M&A landscape. Secondly, acquirers need to continuously ensure synergies between themselves and the target companies are maximized for successful integration. Lastly, the company needs to make sure it clearly defines its acquisition targets and it has an effective search method. Venture IQ could be your perfect partner for this. We have assisted multiple companies in this process, like Royal Haskoning DHV, Committed Capital, and PostNL.

How Venture IQ catalyzes success in programmatic M&A

Navigating this new terrain requires a seasoned guide. Enter Venture IQ: your compass in the realm of programmatic M&A. At Venture IQ, we don't just facilitate Programmatic M&A; we personalize it, crafting strategies that resonate with your unique business DNA, guiding you every step of the way. Deal sourcing is an important part of the programmatic M&A process, as, in order to be able to acquire multiple targets in a programmatic order, one needs to know the market well. At VentureIQ, our vision towards M&A is one of a proactive nature. We help companies to become more proactive in their market mapping and deal sourcing. VentureIQ has assisted multiple clients in pinpointing ideal acquisition targets. Our approach involves:

  • In-depth Market Analysis: Leveraging our expertise to provide comprehensive market intelligence and insights.
  • Customized Deal-Sourcing Solutions: Our tool, Catalist, is designed to streamline the acquisition process, ensuring a perfect match between our client's strategic goals and potential acquisition targets.
  • End-to-End Support: From initial search to final acquisition, we offer guidance throughout the entire M&A process.

Embracing programmatic M&A with VentureIQ

In the rapidly evolving landscape of global business, programmatic M&A emerges as a vital strategy for growth and diversification. With its ability to minimize risks, accelerate strategic growth, and offer a focused approach, it's no wonder that forward-thinking companies are increasingly adopting this methodology. At Venture IQ, we are committed to empowering our clients with the tools and insights needed to thrive in this dynamic environment, making programmatic M&A a pathway to transformative growth. Embark on a journey of transformation and unprecedented growth with Venture IQ. Let's unlock the full potential of your business together. Contact Venture IQ and take your next step into the future of M&A

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Article written by
Guido Steenbergen