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M&A is growing in importance as a way to achieve competitive advantage and, ultimately, high performance.
Accenture conducted exhaustive research on companies that engage regularly in M&A—dubbed “serial acquirers"—to analyze their deal-making DNA. We identified seven focus areas all companies can implement to boost the maturity of their M&A capabilities.
Throughout the 1980s and most of the 1990s, mergers and acquisitions were rare occasions. In fact, it was not until the end of the 1990s that the volume of global M&A deals broke through the 10,000 mark, ultimately achieving a record number of more than 46,000 transactions during 2007. Hence, before 2000, M&A was regarded largely as an art performed mostly by specialized advisors external to the buyer’s organization.
Today, however, the M&A market has become more mature, and M&A itself has evolved from an art into a science and a more formalized corporate discipline. The more deals that are done, and the larger these deals become, the more a company must have its own repeatable methodology, strong governance, formal metrics, and a broad set of internal skills to reduce deal volatility and risk while maintaining the consistency with which M&A projects are executed.
To be sure, many companies are working on defining and improving their M&A capabilities. Yet while M&A experience and opinion abounds, there is limited understanding of precisely which practices and organizational factors drive sustainable M&A success. To help shed light on this issue, Accenture has conducted one of the most extensive and robust M&A benchmarking research studies to date, involving an in-depth analysis of 110 companies that participated in more than 2,500 M&A deals from 2007 to 2009.
Throughout this study, we focused on companies that engage regularly in M&A to analyze their deal-making DNA. Our research has revealed a number of compelling findings:
Serial acquirers drive the market. They represented just 9 percent of all acquiring companies involved in mergers between 2003 and 2009, but accounted for approximately one-third of all deals executed and nearly one-half of the total deal volume during that period.
Serial acquirers’ deals are larger and more complex. Serial acquirers tend to pursue bigger deals that regularly span two or more countries (often in emerging markets).
Serial acquirers face considerable challenges. Due to their greater willingness to take on bigger deals and targets in emerging markets, serial acquirers also are more likely to encounter deals with greater complexity.
Serial acquirers have room for improvement. While most serial acquirers Accenture studied are very strong in traditional M&A processes (M&A governance, strategy management and transaction management) they are comparatively weaker in merger integration and in the supporting processes of M&A performance and knowledge management.
Sustainable M&A success is based on mature capabilities. Accenture discovered that the most successful acquirers are neither the companies that have completed the most M&A deals nor the ones with the most M&A experts on staff—but rather those with distinctive M&A capabilities.
A robust M&A capability is a source of competitive advantage. In times when business environments are increasingly turbulent, M&A enables change and corporate renewal.
Accenture has identified seven areas on which companies can focus to boost the maturity of their M&A capabilities.
Plan the M&A road map. Link M&A to corporate strategy by identifying and comparing options.
Provide direction and end-to-end governance. Given the magnitude and complexity of M&A, companies must be able to ensure M&A projects are consistently well-managed.
Pay attention to incentives and rewards. Targets and rewards for line managers are critically important.
Develop M&A skills across the entire organization. Companies should conduct frequent training of management and business experts as well as M&A specialists.
Learn from experience. Most companies fail to do so; regular, structured “lessons learned” sessions should be undertaken.
Organize for post-merger integration. Appoint a dedicated resource responsible for post-merger integration.
Establish a rigorous auditing process. Include strategic, financial, operational and project management reviews.
Accenture has helped some of the world’s leading companies extract the maximum benefits from their M&A programs on the road to high performance.
Mirko Dier is an executive director and leads Accenture’s Global M&A and Merger Integration group. He joined Accenture in 1995 and works with leading clients particularly in the resources industry with a focus on corporate strategy, M&A, merger integration and business transformation. He holds a master’s degree in business administration and an executive master of business administration degree from the Kellogg School of Management at Northwestern University. He is based in Munich.
Moritz Kübel is a manager in Accenture’s Global Strategy group and leads the research initiative “Inside Corporate M&A.” He has more than nine years of experience in strategy consulting and was responsible for several international M&A engagements in the energy, utilities, metals and industrial equipment industries. Kübel holds a master’s degree in business administration and wrote a Ph.D. thesis on serial acquirers at the Friedrich-Alexander- University of Nuremberg. He is based in Munich.
Artur Meinzolt is a senior manager in Accenture’s Global Strategy group with a specialization in M&A. During more than 11 years of a career in management consulting he advised clients on more than 40 deals internationally (buy side and sell side). His primary industry focus is telecommunications, high tech and renewable energies. He holds master’s degrees in communications and business administration and is based in London.
Hans Langthaler is a Munich-based consultant in Accenture’s Global Strategy group with several years of experience in international M&A. During his career he has worked primarily in the oil and gas, utilities and real estate industries on pre-deal engagements. He holds a Ph.D. in resources management.
August 22, 2011
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