M&A stifled by the failure of firms to plan beyond deals

 
Kasmira Jefford
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COMPANIES undergoing mergers & acquisitions are jeopardising their growth prospects by giving “little or no focus” to the nuts and bolts of post-merger life, according to a new study by Eversheds published today.

Almost half (43 per cent) of companies questioned by the international law firm blamed the failure to address “post deal integration” when carrying out due diligence as the most common reason for deals not successfully achieving their goals.

Evershed’s report into M&A activity surveys 400 multi-national businesses from 41 different countries, which have done at least one cross-border M&A deal worth over $100m (£62.2m) in the past three years.

The research finds that companies are often failing to make the most of cross-border mergers and acquisitions due to weaknesses in the deal process, rather than the target itself.

Most commonly, this is due to the lack of a strong linkage between the planning, execution and integration phases of a deal, the report finds.

Robin Johnson, M&A partner at Eversheds, said: “Businesses need to start joining the dots between the different stages of the deal cycle to move the focus from just simply ‘doing the deal’ to thinking about life for the business beyond the deal.”

Among the other weaknesses highlighted in the report, some 38 per cent of deals where the in-house team were brought in too late also suffered problems during the merger.

Forty-three per cent of respondents felt that the most common reason for failing to realise value in deals was down to avoidable errors in the planning phase while 26 per cent blamed it on “a misalignment” between legal dealmakers and the day to day business team at the end of the process.