Just over a quarter of UK companies infuse cultural DNA of recent acquisitions into their legacy business
LONDON: 22nd February 2018 – Companies are making digital acquisitions in quick succession to gain cutting-edge technology and new talent, but the majority are struggling to extract the full value of deals due to their inability to integrate diverse cultures, Accenture (NYSE: ACN) research finds. Seventy-three percent of UK companies kept recent digital acquisitions as standalone businesses – particularly those operating in consumer goods and energy industries. This comes despite companies recognising that technology (71 percent) and cultural (62 percent) integration are critical to acquisition success.
The Tech-Led M&A study from Accenture Strategy surveyed 1,100 C-level executives from companies around the world – including 110 from the UK – to understand the driving forces behind the digital deal trend and the barriers to unlocking competitive advantage.
The rise of ‘digital deals’
Accenture Strategy research found that digital motivations are increasingly driving M&A transactions. Forty-eight percent of UK companies making acquisitions said their goal was to gain next-generation technology, while 39 percent acquired to gain new capabilities. Companies operating in the industrial, travel and health industries have been the most active in acquiring digital companies.
“Our research indicates a positive trend towards businesses bringing in digital technologies and skillsets through acquisitions. Despite Brexit, these smaller deals have been relatively shielded from the wider impact of uncertainty. This ‘buy over build’ strategy comes in response to large companies wanting to fight back against new disruptors and accelerate their competitive advantage. But many are struggling to integrate diverse cultures – the ‘secret sauce’ powering digital acquisitions – which is key to companies accelerating change,” said Markus Rimner, managing director, Mergers & Acquisitions Europe lead, Accenture Strategy.
As companies look to digital deals to gain a competitive edge, 88 percent of business leaders agree that CIOs need to have a seat at the M&A table in the early stages of discussions. This comes as the majority (83 percent) of leaders say they would benefit from digitising the target screening process and using Artificial Intelligence (AI). Three quarters (75 percent) of executives agree that companies cannot rely on existing M&A capabilities for digital deals.
“Businesses cannot rely on the ‘same-old-same-old’ approach to M&A when pursuing digital targets. They need a different pre-deal team and evaluation criteria due to the size and makeup of these businesses. Artificial intelligence can help companies accelerate due diligence and ensure acquisition targets are the right fit. CIOs and CTOs need to be brought into acquisition discussions much earlier on than what’s currently happening,” said Rimner.
To find out more about the report, visit www.accenture.com/TechLedMandAUK. Join the conversation at @AccentureStrat #MnA.
About the research
In mid-2017, Accenture Strategy surveyed 1,100 C-level executives, representing 13 industries, in seven countries, to explore M&A strategy and how companies are harnessing technology to increase business value.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
Accenture Strategy operates at the intersection of business and technology. We bring together our capabilities in business, technology, operations and function strategy to help our clients envision and execute industry-specific strategies that support enterprise wide transformation. Our focus on issues related to digital disruption, competitiveness, global operating models, talent and leadership help drive both efficiencies and growth. For more information, follow @AccentureStrat or visit www.accenture.com/strategy.
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