Globalization and the Rise of Cross-Border Mergers and Acquisitions: A New Accenture/Economist Intelligence Unit Survey

This survey, undertaken by Accenture and the Economist Intelligence Unit, examines new trends in mergers and acquisitions from US, Western Europe, Asian and India companies, focusing specifically on the challenges and benefits of globalization in cross-border mergers and acquisitions—a key to achieving high performance.

Read the full executive summary of the survey results. [PDF, 125KB]
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With global interest in transnational acquisitions increasing exponentially, Accenture discusses guidelines to achieve successful execution of cross-border deals so that companies can unlock shareholder value.

More and more companies are looking abroad for acquisition targets or merger partners to help them meet their growth aspirations. While transnational deals are not uniquely prone to disaster, they do offer a different mix of opportunities and risks, which need to be understood and managed if the deals are to be successful.

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Activity in mergers and acquisitions (M&A) is booming, and few expect an end to the fervor anytime soon.

Globally, the number and size of deals is heading toward record levels, with cross-border deals taking centre stage as companies take advantage of cheap financing to pursue their expansive M&A strategies.

Many companies, however, are still failing to capture the hoped-for value from their M&A deals. While this reality is not a new one, it is more striking in today's environment, where few deals represent a knee-jerk response to market exuberance.

Accenture and the Economist Intelligence Unit fielded a survey focused on European companies based in the UK, Germany and Scandinavia along with US, Chinese, Japanese and India companies.

In the main part of the survey, the growing importance of cross-border mergers and acquisitions (M&A) emerged as a strong trend in the drive to achieve high performance through globalization.

The following are among the key findings from the Accenture/Economist Intelligence Unit survey:

• Most recent acquisitions have been cross-border: Fifty-eight of the respondents said their most recent acquisition was a cross-border one.
  
  
• M&A activity is, and will be, key to revenue growth: More than half the respondents say that global revenues have grown by an average of 18 percent thanks to merger activity in the last three years.
  
  
• Divestments will continue, and probably increase: Twenty-seven percent of the executives surveyed believe that their company's divestments will increase over the coming three years.
  
  
• M&A vision may exist, but capabilities are often flawed: Many companies claim to have clear strategies for the foreign markets they plan to enter, but far fewer are confident that they thoroughly understand the M&A requirements for success. Executives cite some M&A successes, but few applaud the financial gains: Only 45 percent of the respondents affirmed cost synergies.
  
  
• IT integration is a critical problem in cross-border deals: Only 30 percent pronounced the integration of IT a success for their most recent cross-border deal.

Download the full results for the United States and Europe. [PDF, 179KB]
Download the full results for China. [PDF, 144KB]
Download the full results for Japan. [PDF, 134KB]
Download the full results for India. [PDF, 125KB]
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There seems to be no end in sight for the current mergers and acquisitions (M&A) boom, which has been driven in part by the inexorable trend toward globalization.

In fact, 58 percent of survey respondents who had been involved in M&A recently said that their company's most recent deal had been a cross-border one. That trend stands in sharp contrast to most prior research and data, and highlights the pressure on companies to move beyond simple, less risky domestic deals.

Despite the challenges, executives are satisfied with many of the outcomes of recent mergers and acquisitions (most of which, as we noted, were cross-border). On balance, most survey respondents felt they had succeeded in retaining valuable employees on both sides of the deal, and most were confident that customers had suffered little disruption, especially customers of the acquirer.