The Characteristics of Successful M&A - A Case Study on Handelsbanken's Acquisition of Heartwood
Abstract: Some finance scholars argue that mergers and acquisitions (M&A) provide little to no value to the parties involved in the transaction, especially the acquirer. Such conclusions are usually drawn from analyzing the impact of the transaction on tangible quantitative measures such as stock price and return-based metrics. Through a case study analysis of the acquisition of the UK wealth management firm Heartwood by the Swedish bank Handelsbanken, the authors will provide the reader with alternative and complementary methods to evaluate M&A transactions. After conducting 5 interviews, ranging from top executives, board members, and shareholders, to financial advisors and client directors, this thesis concludes that the evaluation of M&A should not only focus on short-term quantitative metrics that are not necessarily representative of long-term shareholder value. Instead, looking at industry-specific key performance indicators can provide useful insights into the success of the transaction. The authors hope that this M&A case study will serve as an educational tool that broadens the reader's understanding of key M&A considerations pre, during, and post-acquisition, with a special focus on valuation methodologies for both banks and non-bank financial institutions. Finally, it provides the reader with interesting drivers of the success of the acquisition that could be applied in future M&A transactions.
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