Management may be the key factor in determining M&A success, according to new research.
In fact, management may play a more significant role in driving a deal than external economic factors, said the report by PricewaterhouseCoopers.
The study, which is based on interviews with senior executives involved with some of the ‘most and least successful’ deals of the last decade, identified key leadership factors and ‘behavioural red flags’ throughout the M&A process, from pre-deal to post-integration.
Andrew Miskin, PricewaterhouseCoopers’ global post-merger integration leader, said a commonly held notion is that management is largely at the mercy of external market forces.
“However, this research backs up our own experience in working with clients in suggesting that this is far from the case.
“In reality, management can exercise a great deal of control and leverage in shaping deal value even in the type of challenging market conditions that we are currently experiencing,” he said.
The news came as Grant Thornton announced that UK companies spent over £129bn acquiring companies overseas during 2007 – almost twice as much as they spent on domestic M&A.
The company said the figures indicated that many British firms are seeking more beneficial economic conditions abroad for their expansion plans.
David Brooks, head of M&A at Grant Thornton Corporate Finance, said the outward focus of UK firms was a direct reflection of current global economic trends, which was due to continue through 2008.
“This international diversification of assets held by UK companies can be viewed as a positive development, as substantial UK investment in economies still enjoying growth rates of more than 5% should offer substantial flow-back benefits,” he said.
“As the credit crunch continues to bite in the UK, it is sometimes overlooked that major segments of the global economy have simply never looked better, particularly parts of South and South East Asia and Eastern Europe.”
© Crimson Business Ltd. 2008
