Most acquisitions and divestments don’t maximise value – even when some dealmakers think they do. But acquirers who prioritise value creation at the onset outperform peers by as much as 14%
- Stay true to the strategic intent: Organisations should approach deals as part of a clear strategic vision and align deal activity to the long-term objectives for the business. 86% of buyers surveyed who say their latest acquisition created significant value also say it was part of a broader portfolio review rather than opportunistic.
- Be clear on all the elements of a comprehensive value creation plan – it should be a blueprint, not a checklist. Ensure a thorough and effective process for conducting the deal with the necessary diligence and rigour in the value creation planning process across all areas of the business. Consider how each of these support the business model, synergy delivery, operating model and technology plans. For acquisitions with significant value lost relative to purchase price: 79% didn’t have an integration strategy in place at signing, 70% didn’t have a synergy plan in place at signing, and 63% didn’t have a technology plan in place at signing.
- Put culture at the heart of the deal: Talent management and human capital affect how businesses are able to deliver value pre- and post-deal. 82% of companies who say significant value was destroyed in their latest acquisition lost more than 10% of employees following the transaction.
The conversations with corporate executives show that companies that genuinely prioritise value creation early on – rather than assume it will happen as a natural consequence of the actions they take as the transaction proceeds – have a better track record of maximising value in a deal.
- The report – Creating value beyond the deal: What if you took a different perspective to your M&A? - can be accessed via: www.pwc.com/deals-report
- There are two main components of the survey findings: a public company perspective (both buyer and seller sides) and a private equity (PE) perspective. The private equity perspective will launch at a later date in 2019.
- The report, with support from Mergermarket and Cass Business School, analyses industry data for the top global deals from 8 years of transaction data and includes interviews of 600 Global senior corporate executives, 100 Global PE Executives, and over 30 PwC Deals Leaders.
- Acquisitions are defined as change-of-control transactions where the company buys control of another company.
- Divestments are defined as change-of-control transactions where the company fully divests a division or subsidiary.
- Across both acquisitions and divestments, Total Shareholder Return is calculated over the period from one month prior to announcement to 12 months post completion. The research team required firms to have valid return data 12 months after deal completion so as to be able to calculate the Total Shareholder Return.
- The following restrictions were applied to construct the final sample of transactions: deals are completed; company market value as of the month prior to deal announcement is at least €100 million; and transaction value is at least €50 million and a minimum of 10% ration of transaction size to MV.
- Please visit www.pwc.com/deals-report for more information.
- Significant value lost relative to purchase price: 7%
- Moderate value lost relative to purchase price: 17%
- Little/no value created relative to purchase price: 15%
- Moderate value created relative to purchase price: 40%
- Significant value created relative to purchase price: 21%
Ryan SpagnoloPwC Global CommunicationsUnited Statesryan.firstname.lastname@example.org-
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