Corporations See Acquisitions as Key to Growth Strategy: Deloitte and The Deal Survey

NEW YORK, April 7 /PRNewswire/ -- As companies of every size and industry plan their growth strategies as the economy rebounds, more than half (52 percent), according to a new survey by Deloitte and The Deal, expect mergers and acquisitions (M&A) to add 5 percent or more to revenue growth on a compound annual basis over the next two to five years. This, according to the study "Corporate Development 2010: Refining the M&A Playbook," is significant when compared to the average annual revenue growth of the Standard & Poors 500 of approximately 4 percent over the past 10 years.

The survey and study also found that as the pace of competitive change accelerates, most companies are acknowledging that corporate development has become critical to their overall success and fully expect corporate development teams to play a leading role in this next phase of growth.

"Seventy percent of survey respondents said that, compared to today, corporate development will be more important in achieving their company's strategic goals over the next few years," said Chris Ruggeri, principal, Deloitte Financial Advisory Services LLP (Deloitte FAS).  "Additionally, the stature of corporate development executives in organizations appears to be gaining prominence with most serving as important advisors to chief executive officers and chief financial officers in shaping, validating and executing strategy," added Ruggeri, who also leads M&A services for Deloitte FAS.

Other noteworthy survey results included:

• Corporate Development teams will have to work much harder to scout out deals and drive performance in the months ahead.  Most respondents (66 percent) said they have no plans to expand the size of these groups even though many (60 percent) expect to be much busier pursuing deals over the next two to five years.  This suggests that companies are becoming more adept at leveraging resources and knowledge across their organizations and with networks of external advisors -- a hub-and-spoke approach with corporate development sitting at the center of the network.

• More than a quarter of respondents (26 percent) believe having the ability to analyze value and risk is the most important skill in their arsenal, while 50 percent rated it as the first or second most important skill.  Yet, when asked in the survey what represents the greatest opportunity for improving corporate development effectiveness, analytics ranked below organization, process and talent. 

"It's fascinating that value and risk continue to be of paramount importance, and yet there's this apparent disconnect," said Ruggeri. "For companies to gain greater insight and to be able to more dynamically manage and protect value, they should consider refining their approach, explore new ways of thinking and consider, for example, probabilistic modeling, decision analysis and perhaps real options -- all tools of the Corporate Development office."

To better understand the corporate development function and the critical role it will play as the market enters a new deal cycle, Deloitte and The Deal surveyed approximately 150 companies. The survey was conducted online in February and March 2010, and was completed by 158 executives.

Corporate Development is loosely defined as a broad range of activities that support and enable M&A-related growth.  The results of this survey show a portrait of how this critical function is managed in a wide range of companies and what factors contribute most to achieving effective corporate development strategies. 

To download a copy of the survey, please go to:  www.deloitte.com/us/cd/2010playbook. 

About The Deal LLC

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About Deloitte 

As used in this document, "Deloitte" means Deloitte Financial Advisory Services LLP and Deloitte Services LP, which are separate subsidiaries of Deloitte LLP.  Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

SOURCE Deloitte