A piece of simple advice that will help drive M&A-related ROIC significantly higher: acquire quality companies led by quality management teams. Put companies led by quality management teams at the top of your M&A target list.
Quality companies led by quality teams cost more, but they trade at a premium for a reason and will likely deliver superior operating results post-close.
Making cost your primary acquisition filter is a fool’s errand.
If you do acquire a weak company because it trades at a discount to the peer group, it would be best if that company competes within your core business segment. In that case you may cull away the weak acquired management team and have your team run the business.
When acquiring companies outside of your core expertise area, it is imperative to acquire companies led by quality teams as you will need to lean heavily on the acquired team to run that business.