For this study, PwC carried out an assessment of over 200 deals, and interviewed 20 senior deal makers who have bought businesses in growth markets to understand the root causes of problems, and how they overcame the challenges encountered.
While there are plenty of examples of successful deals in growth markets, that the deal makers we interviewed acknowledged that deals in growth markets are inherently riskier. There is a much bigger deviation, or range, of potential outcomes. We refer to this range as the delta, and in growth economies, the delta between a good deal and a bad one is much bigger. If things go well, investors stand to make a lot of money. But if things go badly, investors can lose significantly.
Growth markets are different, which is why our strongest recommendation is to build the local machinery needed to get a deal done well in advance of executing the first deal. This and other recommendations resulting will help companies to avoid doing bad deals, to successfully complete on good deals, and to make sure a good deal doesn’t turn bad after the deal trophy is on the shelf.