Most companies approach deal-making the role of M&A in building competitive advantage as an art rather than as a corporate capability deployed to support a strategy. And they see individual deals as discrete projects rather than integral parts of that strategy. Few have found a way to build and continuously improve, across businesses. An M&A capability that consistently creates value—and does so better than competitors. As a result, many lament how hard M&A is and worry about the statistics highlighting the failure rate of deals. Rather than how to build a capability that helps them win in the marketplace.

In our experience, companies are more successful at M&A when they apply the same focus. Building competitive consistency, and professionalism to it as they do to other critical disciplines. This requires building four often-neglected institutional capabilities. Engaging in M&A thematically, managing your reputation as an acquirer, confirming the strategic vision, and managing synergy targets across the M&A life cycle. The ability to approach M&A in this way elevates it from a tactical necessity focused on risk management to a strategic capability delivering a building competitive advantage that others will struggle to replicate.

Engage in M&A thematically

At many companies, strategy provides only vague direction on where and where not to use M&A—and an unspecific idea of the expected source of value creation. We often find companies using M&A indiscriminately to purchase growth or an asset. Without a thorough understanding of how to create value in a deal relative to others, a so-called “best owner” mindset. Rarely is there an explicit link to organic investments or the business cases for broader growth initiatives? Such as developing new products or building a sales force to deliver an acquired product? As a result, companies waste time and resources on targets that are ultimately unsuccessful and end up juggling a broad set of unfocused deals.

Successful companies instead develop a building competitive pipeline of potential acquisitions around two or three explicit M&A themes. These themes are effective business plans that utilize both M&A and organic investments to meet a specific objective while explicitly considering an organization’s capabilities and its characteristics as the best owner of a business. Priority themes are those where the company needs M&A to deliver its strategy and have the ability to add value to targets; they are also highly detailed and their effect is measurable in market share, customer segment, or product-development goals.

Consider, for example, the M&A theme of one global retail company. To grow by entering into two emerging markets, acquiring only local companies. They are unprofitable yet in the top three of their market. That’s a level of specificity few companies approach. To get there, managers started with the company’s strategic goal. To become the third-largest player in its sector within five years, something it could only achieve by aggressively entering emerging markets. A less disciplined company might have stopped there and moved on to a broad scan for targets.

But managers at the retail company refined their M&A goals further. They concluded that trying to enter too many markets at once was impractical due to constraints. On management time and the complexities of entering new geographies. So they limited their search to the two most promising regions. They also knew their lean operations would offer cost synergies in companies with bloated operations. Especially given the importance of economies of scale in the industry. And that local branding and catering to local preferences were critical.

With their M&A theme defined so precisely. Managers were able to narrow the list of potential candidates to a handful of companies. Well ahead of its five-year schedule. The company has successfully completed the acquisitions needed to enter its targeted emerging markets and has nearly achieved its revenue goals.