The Phases of M&A: Questions Directors Can Ask

As part of effective oversight of mergers and acquisitions (M&A) (addressed in this Director Essentials), directors should ask questions throughout the entire life cycle of a transaction.

Fundamentally, the board will want to inquire about the M&A process, asking, for example, what processes are in place for the board and management to discuss M&A and the alternatives. Other general questions might address the criteria for bringing a transaction to the attention of the board or the frequency of M&A discussions. By asking insightful questions about each phase, boards can improve the chances that any M&A transaction, if pursued, will create optimal value for all participants.

The list of questions below is not exhaustive. For a tailored set of questions, board members and their advisors should consider the facts and circumstances of their own situations.

1. Strategy

• What are the implications of this transaction for our business over the next five years with respect to megatrends, including exponential digital technological change, climate change, increasing geopolitical instability, heightened investor and social activism, and hyper-transparency?
• What potential opportunities and risks are involved in acquisition growth versus organic growth? Are we certain that the purchase/sale is our best option? Have we assessed alternatives?
• How closely does our M&A stance align with our current strategy? Are we too active or not active enough? If we are active, does our pipeline of acquisition targets (candidates for purchase) fit our strategy?
• How does information about M&A opportunities flow from management and external advisors to the board?
• Looking at our portfolio of products and company units, are there any that we might consider selling at this time? Why or why not?
• When there is a proposed transaction: Why are we considering this purchase/sale? What assumptions underlie the calculation of specific synergies, cost savings, or other projected benefits?