In an opinion feature for CFO Dive, Managing Director Conor Johnston explains why buying growth through mergers and acquisitions (M&A) often fails to deliver the outcomes leadership teams expect.

While growth through acquisition can look compelling in the short term, Conor explains that sustainable shareholder returns require disciplined focus on core performance and alignment between executives and boards.

In the article, Conor highlights practical ways leaders can pursue durable performance improvement, including how to:

• Pressure test acquisition assumptions early. Many deals disappoint when buyers overestimate what they are buying and miss anticipated synergies.
• Recognize the incentives driving risky deal behavior. Shorter chief executive officer (CEO) tenures and short-term performance pressure can encourage transaction-first strategies.
• Start with core markets and adjacency strategy. Identify where the core business competes, then evaluate adjacencies and portfolio opportunities with margin improvement potential.
• Focus relentlessly on the customer journey and go-to-market execution. Improve performance by understanding buying decisions and aligning the commercial approach accordingly.
• Use alternatives when immediate impact is required. Consider options such as stock buybacks and pair them with sustained improvement in core competencies.
• Align board and executive incentives to long-term health. Boards can help reduce repeat cycles of short-term deal-driven strategies by shifting incentives away from near-term stock outcomes. 

Read the full article to learn why growth through acquisition often disappoints, and what leaders and boards can do to prioritize sustained growth and profitability.

Read on CFO Dive