PwC’s 2020 M&A Integration Survey
Deals are shifting to transactions that can deliver value in a slower economy. As they face a higher bar for success, companies need to be nimble while still achieving the essentials of M&A integration.
After a historically long economic expansion that encouraged transformational deals, M&A is seeing a significant shift in an environment upended by a global pandemic. This shift demands an approach to M&A integration that leverages both established practices and new tactics and tools – aimed at capturing and protecting a deal’s value.
As PwC’s 2020 M&A Integration Survey shows, companies that once pursued transformation through deals are now considering other types of transactions. Absorption and tuck-in deals have surged in the past three years. The former allows acquirers to efficiently scale within their industries. The latter provides access to new technologies to stay ahead of competitors.
The swings in deal types suggest companies are rethinking their M&A strategies, which have become even more critical during the health crisis and ensuing economic turmoil. In PwC’s 23rd Global CEO Survey, more than 60% of US executives said they expect economic growth to decline in 2020, and nearly 80% said they were concerned about the speed of technological change.
Given these factors, the standard for successful integration is higher. After previous M&A integration surveys showed improvement in achieving strategic, operational and financial success, the latest survey features much lower marks, indicating a pause in progress.
One potential reason is a plateau in companies’ approach to integration, with many acquirers ready for new techniques and tools to manage new challenges. Another reason could be higher expectations, as senior management and boards of directors have become increasingly involved in M&A.
In a volatile economy, the 2020 M&A Integration Survey shows companies haven’t necessarily mastered the key elements of a successful integration. Along with the survey findings, this report includes insights in four critical areas – integration strategy, value capture, people and change, and the transition program – that can help acquirers navigate a turbulent landscape and experience a smoother integration journey.
A coordinated approach to M&A integration is critical, and the value of a company can be shaped greatly by how well it integrates an acquisition. Taking early, deliberate steps can help enable a smooth transition in the weeks and months after closing. Companies that can answer the key questions detailed in our full survey report will likely be better equipped to execute M&A integration in a challenging economy and help position their organizations for long-term business success.
Deals Partner, PwC US