Value Creation in Deals

Look at your M&A from a different perspective

Create a blueprint to make your M&A pay.

We deliver pre, during and post-deal expertise ensuring you leave no value on the table. We worked with Mergermarket and Cass Business School to survey over 600 global corporate executives to uncover how they create value through M&A. #BeyondTheDeal

Creating value beyond the deal: M&A report

To find out whether deal value potential is being realised, we worked with Mergermarket and Cass Business School to explore what made some deals successful and others not.

The research reveals that many acquisitions and divestments don’t create maximum value - even when some dealmakers think they do. For example, more than six out of ten buyers (61%) believe their last acquisition created value. But, our Creating value beyond the deal M&A report shows that over half (53%) underperformed their industry peers over the 24 months following completion of their last deal.

To find out whether deal value potential is being realised, we worked with Mergermarket and Cass Business School to explore what made some deals successful and others not.

The research reveals that many acquisitions and divestments don’t create maximum value - even when some dealmakers think they do. For example, more than six out of ten buyers (61%) believe their last acquisition created value. But, our Creating value beyond the deal M&A report shows that over half (53%) underperformed their industry peers over the 24 months following completion of their last deal.

To find out whether deal value potential is being realised, we worked with Mergermarket and Cass Business School to explore what made some deals successful and others not.

The research reveals that many acquisitions and divestments don’t create maximum value - even when some dealmakers think they do. For example, more than six out of ten buyers (61%) believe their last acquisition created value. But, our Creating value beyond the deal M&A report shows that over half (53%) underperformed their industry peers over the 24 months following completion of their last deal.

Key Findings

Create a clear value creation approach

Ensure a thorough and effective process for conducting the deal with the necessary diligence and rigour around financials, operations, market positioning, technology, tax, legal and people matters.

Value creation plans should include a thorough assessment of whether the deal is the right one to pursue and a clear methodology. 98% of companies that say their last acquisition created significant value also say they have a formal value creation methodology in place. In addition to operational improvement, the plan should cover strategic repositioning, a tax-efficient operating model and working capital performance to achieve the full value potential.

Put culture at the heart of the deal

Keeping people and cultural aspects upfront in planning is fundamental. Wide engagement and communication of your value creation plan will help retain and build buy-in from key personnel. Failing to plan for cultural change will significantly undermine the value created.

Nearly two-thirds of executives (65%) believe that cultural issues hampered the realisation of value in their last major deal. Furthermore, 82% of those reported that significant value was destroyed in their latest acquisition lost more than 10% of key employees following the transaction. The ability to bring the cultures together should be a key deciding factor on completing the deal.

Stay true to the strategic intent

Approach deals as part of a clear strategic vision for the business. Opportunistic dealmaking can create value, but not as often.

Of the deals regarded as creating significant value relative to purchase price, 86% were driven by a strategic portfolio review, while only 14% were considered as opportunistic.

"The conversations with corporate executives show that companies that genuinely prioritise value creation in a deal 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 total shareholder return. Always be deal ready."

Joseph Muscat Advisory, PwC

 

 

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Joseph Muscat

Head of Advisory, PwC Malta

Tel: +356 2564 7091

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