Survey: M&A Dealmakers Optimistic but Frequently Disappointed Crowe Horwath LLP study explores how companies evaluate acquisition risks and execute transactions
CHICAGO, Feb. 13, 2014 /PRNewswire/ -- While an overwhelming majority of companies with mergers and acquisitions (M&A) departments are actively pursuing deals, 51 percent of the respondents to the "Critical Pillars for M&A Success" survey admitted falling somewhat or significantly short of their desired rate of return on completed transactions. The survey was conducted by Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S.
The survey, which incorporated responses from 80 C-suite and corporate development executives, showed that M&A has become routine for many companies, with 63 percent of the respondents saying their companies have pursued three or more deals in the past two years. Yet the respondents admitted to many reservations about their companies' deal-making prowess:
- Only 45 percent expressed a belief their companies do a very good job at managing their deal pipeline.
- Fewer than a third of the respondents said their companies clearly define a strategic plan to identify M&A opportunities.
- Only 37 percent said their companies have proper governance to prevent the C-suite from unduly influencing whether to consummate a transaction.
- Just 47 percent said their companies maintain clarity and focus throughout the deal process.
- Only 12 percent said they are very efficient at executing M&A deals.
- A mere 9 percent of the respondents said they are very effective at capturing synergies targeted at the start of the transaction process.
- Nearly a quarter said their companies do a poor or very poor job of communicating about and achieving alignment with the structure of a combined organization.
"M&A 'failure' results when a deal fails to meet the goals identified prior to the transaction," said Marc Shaffer, managing partner of financial advisory services for Crowe. "Our study attempts to peel back the onion, exploring what's happening systematically at each level of the M&A value chain."
M&A volume has been stable for three years, and there has been highly visible consolidation in the telecommunications, media and technology industries, according to the latest trend report by Mergermarket. Signaling that M&A remains a core piece of a company's business growth strategy, most of the responding executives reported expecting to continue devoting significant time and resources to deal-making in 2014. Executives also said they generally are hopeful about future deals, but most admitted their companies' past deals have not achieved hoped-for financial outcomes and operational synergies.
"Given the high-stakes involved, it should no longer be acceptable for companies to take a 'fly by the seat of your pants' approach to M&A execution," added Chris Nemeth, leader of M&A integration services at Crowe. "With more than half of companies falling short of achieving the desired rate of return, we wanted to examine the root causes by polling experienced and sophisticated corporate serial acquirers."
About the "Critical Pillars for M&A Success" Survey
The "Critical Pillars for M&A Success" survey was distributed in November 2013 and received responses from 80 senior executives. Representing companies of various sizes and industries, respondents identified themselves as CEOs, CFOs, corporate/business development officers, consultants and other finance and M&A-focused titles.
For more information and to receive the complete survey report, please visit www.crowehorwath.com/criticalpillars-nr.
About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting and consulting firms in the United States. Under its core purpose of "Building Value with Values®," Crowe uses its deep industry expertise to provide audit services to public and private entities while also helping clients reach their goals with tax, advisory, risk and performance services. Crowe and its subsidiaries have offices coast to coast with more than 3,000 personnel. The firm is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest global accounting networks in the world, consisting of more than 150 independent accounting and advisory services firms in more than 100 countries around the world.
SOURCE Crowe Horwath LLP