How to Avoid Irrational Decision Making in M&A

When making decisions, most people tend to go with their gut feeling rather than relying on the accurate data available. People will not like to admit this, but as humans we find it very difficult to remain 100% objective. Inevitably, emotions become a factor when running a business which is natural as you must have some form of passion in order to run a company and make it a success. Particularly when it comes to a potential deal being made, emotions can outweigh cold hard facts.

Now, while excitement in mergers and acquisitions is important, being overly reliant on your gut instinct to process decisions can be a recipe for disaster. Paying equal attention to the facts is essential in order for there to be a successful outcome.

These three steps are designed to help you in making good decisions as well as sticking to the facts when it comes to pursuing acquisitions:

Recognise you’re human

The first step is simple, recognising that you’re not always objective and become an observer of your own natural impulses to emotion-driven decisions.

Develop Tools

Once you have mastered the first step, you can move on to developing tools that will assist you in remaining objective.

Two of the tools that are frequently used are the Market Criteria Matrix which evaluates and prioritises the best markets, as well as the Prospect Criteria Matrix which serves the same purpose for identifying suitable acquisition candidates.

To use the first tool, start by selecting six key characteristics of the ideal market in which you want to make an acquisition.

Next, develop metrics to quantify these criteria and follow this process for each of the criteria that you have identified.

The Prospect Criteria Matrix works in a similar fashion but instead, you develop and quantify criteria specific to company-level data.

Ask Your Team

Finally, when it comes from either your executive team, functional leaders or your third party advisor, feedback from others assists you in broadening your perspective, bringing balance to your decisions. A different perspective provides an opportunity for you take a second look at the factual information, letting you to either confirm or invalidate your analysis. Disagreements are at times a necessity when coming to a final decision. What really matters is that throughout the entire process, you offset the unavoidable impact of emotions with a good measure of fact-based analysis.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit

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