KPMG Survey: Successful M&A Deals Nearly Double

Improved Strategic M&A Planning Boosts Shareholder Value;

U.S. Outpacing European Firms



Apr 30, 2001, 01:00 ET from KPMG LLP

    NEW YORK, April 30 /PRNewswire/ -- Companies involved in mergers or
 acquisitions improve shareholder value by focusing on seven key processes that
 stress strategic, front-end planning and close management of the deal and the
 integration, according to a study released by professional services firm KPMG
 LLP.
     (Logo:  http://www.newscom.com/cgi-bin/prnh/20000901/KPMGLOGO )
     The KPMG study showed that these seven key processes helped some 30
 percent of M&A deals from 1997 to 1999 enhance shareholder value, a dramatic
 improvement from an earlier study.  In 1999, KPMG released research that found
 only 17 percent of companies had improved shareholder value in deals during
 the period 1996-1998. Also noteworthy, the percentage of deals that reduced
 shareholder value fell from 53 percent in the 1999 study to just 31 percent in
 the most recent research.
     "This research tells us that executives in the front office are doing
 things smarter. In many cases, they have put a strategic management process in
 place very early in the cycle, and that is helping dramatically," said Donald
 C. Spitzer, global lead partner for KPMG's Transaction Services practice, a
 leading strategic adviser in mergers and acquisitions.
     In particular, the research identified seven key practices that made
 companies who adopted them at least twice as likely to create rather than
 destroy value. The seven practices are: early action; board of directors
 involvement; pre-bid value assessment; formal transaction process plan;
 process manager involved throughout; process manager empowered with
 wide-ranging role; and independent assessment of post-deal implementation.
     "Managing the process doesn't happen automatically. People are learning to
 devise a focused corporate strategy early in the transaction process," said
 Spitzer. "Those companies that put planning on the front end are the ones that
 are winning the transaction game."
     More U.S. companies (35 percent) are deriving value from mergers and
 acquisitions than their European counterparts (24 percent), because pre-bid
 assessment and issues management were stressed more in the United States,
 according to the study, which used stock prices before and after the deals to
 analyze whether value was enhanced, destroyed or unchanged.
     An accent on early planning, vigorous process management and clear
 delineation of responsibilities were seen as primary catalysts in cultivating
 shareholder value, the survey indicated.
     In addition, the survey found that experience in M&A activity provides no
 potential advantage for success in M&A deals; companies involved in a high
 number of transactions did not necessarily have a better track record in
 forging shareholder value.
     And while bolstering shareholder value remains a prime goal of corporate
 activity, the survey clearly reflected other, more immediate goals of a
 company embarking on a transaction. Some 29 percent cited increasing market
 share and 28 percent targeted expanding into new geographic markets as pivotal
 objectives for making a deal.
     The report's research was conducted in two parts. Board members at 118
 companies who had been closely involved in their company's deals were asked
 about the process adopted and their view of the transaction's success. Then,
 for each deal, a relative measure of change in equity price was taken pre-deal
 and again a year later. This was compared with the overall trend in the
 relevant industry segment to arrive at an assessment of whether or not
 shareholder value had been created.
 
     KPMG LLP is the accounting and tax firm that understands the needs of
 business in the global economy. We help our clients by devising
 results-oriented business strategies, providing insights that help them stay
 ahead of the competition and achieve market-leading results. KPMG LLP is the
 U.S. member firm of KPMG International. KPMG International's member firms have
 more than 108,000 professionals, including 7,000 partners, in 159 countries.
 KPMG's Web site is http://www.us.kpmg.com
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X50978306
 
 

SOURCE KPMG LLP
    NEW YORK, April 30 /PRNewswire/ -- Companies involved in mergers or
 acquisitions improve shareholder value by focusing on seven key processes that
 stress strategic, front-end planning and close management of the deal and the
 integration, according to a study released by professional services firm KPMG
 LLP.
     (Logo:  http://www.newscom.com/cgi-bin/prnh/20000901/KPMGLOGO )
     The KPMG study showed that these seven key processes helped some 30
 percent of M&A deals from 1997 to 1999 enhance shareholder value, a dramatic
 improvement from an earlier study.  In 1999, KPMG released research that found
 only 17 percent of companies had improved shareholder value in deals during
 the period 1996-1998. Also noteworthy, the percentage of deals that reduced
 shareholder value fell from 53 percent in the 1999 study to just 31 percent in
 the most recent research.
     "This research tells us that executives in the front office are doing
 things smarter. In many cases, they have put a strategic management process in
 place very early in the cycle, and that is helping dramatically," said Donald
 C. Spitzer, global lead partner for KPMG's Transaction Services practice, a
 leading strategic adviser in mergers and acquisitions.
     In particular, the research identified seven key practices that made
 companies who adopted them at least twice as likely to create rather than
 destroy value. The seven practices are: early action; board of directors
 involvement; pre-bid value assessment; formal transaction process plan;
 process manager involved throughout; process manager empowered with
 wide-ranging role; and independent assessment of post-deal implementation.
     "Managing the process doesn't happen automatically. People are learning to
 devise a focused corporate strategy early in the transaction process," said
 Spitzer. "Those companies that put planning on the front end are the ones that
 are winning the transaction game."
     More U.S. companies (35 percent) are deriving value from mergers and
 acquisitions than their European counterparts (24 percent), because pre-bid
 assessment and issues management were stressed more in the United States,
 according to the study, which used stock prices before and after the deals to
 analyze whether value was enhanced, destroyed or unchanged.
     An accent on early planning, vigorous process management and clear
 delineation of responsibilities were seen as primary catalysts in cultivating
 shareholder value, the survey indicated.
     In addition, the survey found that experience in M&A activity provides no
 potential advantage for success in M&A deals; companies involved in a high
 number of transactions did not necessarily have a better track record in
 forging shareholder value.
     And while bolstering shareholder value remains a prime goal of corporate
 activity, the survey clearly reflected other, more immediate goals of a
 company embarking on a transaction. Some 29 percent cited increasing market
 share and 28 percent targeted expanding into new geographic markets as pivotal
 objectives for making a deal.
     The report's research was conducted in two parts. Board members at 118
 companies who had been closely involved in their company's deals were asked
 about the process adopted and their view of the transaction's success. Then,
 for each deal, a relative measure of change in equity price was taken pre-deal
 and again a year later. This was compared with the overall trend in the
 relevant industry segment to arrive at an assessment of whether or not
 shareholder value had been created.
 
     KPMG LLP is the accounting and tax firm that understands the needs of
 business in the global economy. We help our clients by devising
 results-oriented business strategies, providing insights that help them stay
 ahead of the competition and achieve market-leading results. KPMG LLP is the
 U.S. member firm of KPMG International. KPMG International's member firms have
 more than 108,000 professionals, including 7,000 partners, in 159 countries.
 KPMG's Web site is http://www.us.kpmg.com
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X50978306
 
 SOURCE  KPMG LLP