For many executives, doing a deal in a downturn seems risky. For companies that are relatively strong, strategically and financially, however, recessions present opportunities to improve their competitive position through acquisitions and partnerships. Consider last month's decision by GlaxoSmithKline to pay up to £2.5 billion for Stiefel Laboratories, the skincare products maker.

M&A can enable a company to emerge from the downturn both strong and flexible. Our analysis of more than 24,000 transactions between 1996 and 2006 shows that acquisitions completed during and right after the 2001-02 recession generated almost triple the excess returns of acquisitions made during the preceding boom years.

For companies with the resources to undertake deals, there are three necessary ingredients for success: an investment thesis tailored to a company's strategic priorities; the right list of targets; and a well prepared team ready to act quickly.

To boost the odds of success, you need a clear investment thesis to articulate why buying a business will make your company more valuable. In one survey of acquirers, we found about 80 per cent of successful transactions were based on a clear investment thesis. For failed deals, the proportion was about 40 per cent.

Also, each transaction needs to strengthen a company's basis of competition through cost position, brand strength, customer loyalty and ownership of a distinctive set of assets and capabilities.

For Lafarge, the world's largest cement company, the purchase of L&T Concrete, of India, last year pushed it into a leadership position in India's ready-mix concrete market, which has strong long-term growth potential. The deal was also in sync with Lafarge's strategy of increasing its presence in emerging markets.

Seasoned dealmakers know their basis of competition and are continually thinking about the kinds of deals they should be pursuing. They cultivate relationships with each potential target so that they can get to the table quickly, sometimes before the “For Sale” sign goes up.

Acquisitions on this basis helped to expand Pearson's presence in education technology. Last month the company acquired Intellipro, publisher of the online learning platform dottlearn.com, National Transcript Center, developer of an electronic transcript exchange for schools, and Wall Street English, China's leading provider of English-language training.

To boost the odds of a successful deal, ratchet up the diligence. Well-planned post-merger integration is also critical to successful deals and the planning has to begin during the diligence.

Don't assume that conventional mergers and acquisitions are your only options. Scarce capital is likely to make joint ventures and alliances increasingly popular. Divestitures can be game-changing, too, and they build on a similar set of disciplines.

Whichever options you pursue, creating an investment thesis for deals that strengthen your basis of competition, picking the right targets and preparing to act quickly can help your company to emerge stronger from economic turbulence.

— Graham Elton is European head of private equity at Bain & Company. Adapted from the forthcoming book Winning in Turbulence.

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