By Rowan Mcdonald
In business, growth is often equated with expansion—acquiring companies, merging operations, and chasing economies of scale.
However, growth, particularly through mergers and acquisitions (M&A), is not just about getting bigger. It is also about getting better.
Successful M&A transactions are built on more than financial calculations.
They require a deep understanding of the businesses involved—their people, cultures, and long-term aspirations. The right deal does not simply add revenue; it enhances capability, resilience, and strategic direction.
A measured approach to M&A is vital.
Businesses should pursue transactions that align with their purpose rather than those driven by short-term financial gain. The first step in any transaction is understanding the business beyond its balance sheet. What makes it work?
What are its competitive advantages?
What levers, if pulled, will create longterm value?
One of the most common mistakes in M&A is underestimating complexity.
The assumption that a deal will work because the numbers align on paper often leads to disappointment. A business is more than its financials—it is a system of relationships, processes, and aspirations. Without the right insight, transactions can disrupt rather than enhance these dynamics.
To make informed decisions, it is best to model businesses as a collection of
interconnected variables—financial and non-financial. Assess risk holistically, incorporating everything from operational strengths to leadership structures.
For example, a company’s culture plays an often-overlooked role in determining whether a merger succeeds. If two businesses operate with fundamentally different mindsets—one prioritising agility, the other preferring bureaucracy—the integration challenges may outweigh the benefits. Numbers and people tell stories that help understand what drives a business.
Processes that unpack businesses into as many variables as possible allow you to rank those variables and plot around them.
This can show how, by pulling this or that lever, you can enhance or destroy a business.
If your modelling understands the nuts and bolts and motivation and capacity, you can change a business strategy with significant effect. Asking the right questions is critical. Converting that knowledge into a flexible financial model that shows how different scenarios work informs value creation, transaction structuring, risk mitigation, and appropriate contracting.
M&A should not be purely transactional. The best deals are those that set businesses up for enduring success. This means structuring deals with flexibility, mitigating risks before they materialise, and ensuring that the incentives of all stakeholders are aligned.
The involvement of your advisor in any M&A should not end when the contracts are signed. We work alongside our clients to integrate new businesses, refine strategies, and unlock potential.
Long-term partnerships, rather than one-off deals, create value.
We have advised governments on restructuring multi-billion entities and worked on transactions up to R4 billion in value. However, the ones that thrive take the time to understand their motivations for growth. They ask the hard questions before pursuing a transaction. The most successful deals are not necessarily the largest, but rather those
that are well-conceived and precisely executed. This requires M&A advisers to have extraordinary comprehension of the companies they are dealing with.
Growth through M&A is not a numbers game but a strategic choice. Firms are alive in the stories of their impact. You have to know the DNA of the company you are advising. Our experience is that successful M&As involve sustainable and ethically driven companies that create jobs, and grow the economy. They build businesses with purpose.
Rowan, a chartered accountant and entrepreneur, is the CEO of Letsema Corporate Finance, a division of Letsema, an investment firm started in 1996 by Isaac Shongwe and Derek Thomas. The group’s interests range from mining to professional services. Letsema also runs a foundation that leverages business for social change.
cf.letsema.co.za
