Throughout my career, I’ve been a proponent and driver of strategic M&A activity. Strategic divestitures, too. But these actions are hard on any organization—they can add value or destroy it. Even the most strategic, culturally aligned mergers put incredible stress on employees. And the demands of working through the details can cannibalize resources otherwise dedicated to organic growth.
Governance discipline makes all the difference. This is where the Board of Directors should step in. They must ask the right questions and demand solid answers before greenlighting any transaction related to acquiring, merging, or divesting. What does this include?
Is it the right strategic fit? Something that seems “too good to miss” is only a great deal if it aligns with preestablished strategic goals. Boards should press for clarity on rationale and synergy. Common pitfalls include overpromising and then neglecting the core business. There’s no good price for the wrong thing.
Has leadership done due diligence? Financials are just the start. Valuation discipline is key. Boards should be suspicious of hockey-stick projections and demand realistic considerations regarding downside impact. Quantify how the legacy business might suffer. Consider culture, tech, talent, and potential red flags. Are customers in sync with the proposed deal? Are there potential conflicts of interest? Will key players stay with the move or look elsewhere? Growth is exciting, but not at any price. Boards can help ensure that reason prevails over momentum.
What are the metrics for operational efficiency? If efficiencies are implicit, they need to be explicit. What are the tactical plans that will bring about the desired efficiencies and add value? Boards can support management in identifying early wins while maintaining day-to-day continuity and accountability.
What is the plan for integrating cultures? Even companies that seem to have shared values and mission statements are coming from different places. Misaligned cultures can quietly derail integrations. Boards should ask specific questions about how values and ways of working will be orchestrated to blend. Don’t underestimate the extent to which “process” is part of the culture.
According to a McKinsey report, global M&A activity surged 22% in the first half of 2025, driven by a rise in megadeals and a return of private equity firms. That’s despite notable geopolitical volatility. Clearly, the right acquisition can accelerate growth—and the right divestiture can fund it. Good governance doesn’t slow down dealmaking; it makes it smarter. The best boards bring a steady hand, tough questions, and a long view to every transaction, balancing the urge to merge with prudent stewardship.