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PwC M&A Survey Reveals Optimism Among Dealmakers

March 16, 2017, 08:00 AM
Filed Under: Economic Reports
Related: M&A, PwC

PwC released its tri-annual M&A Integration Survey, now in its 20th year, which has tracked the integration strengths and weaknesses of public-company M&A since 1997.

With increasingly diverse and multigenerational workforces, and most industries undergoing some form of digital disruption, today’s business leaders find it more prudent to buy than to build talent and capabilities they need to join the ranks of the disruptors. By definition, that means many of today’s deals require integrating a completely different type of organization with capabilities far outside the acquirer’s core.

“Dealmakers are more ambitious than ever before. They’re using M&A not only to improve the bottom line, but to stretch their business, adding new and often unfamiliar capabilities,” said Gregg Nahass, partner in PwC’s Deals practice and author of the study. “Reaching into unknown territory for growth is, of course, riskier than combining organizations that have a lot in common.”

PwC’s 2017 M&A Integration Survey found that companies are getting better at achieving certain goals, but they are still struggling to reach others—namely because their expectations are changing. The report explores the challenges that today’s dealmakers are facing, along with what dealmakers are getting right about integration and where they need to improve.
Redefining M&A Success

Companies are achieving greater financial and operational success with their deals, but strategic success is getting harder to come by. Transformational deals continue to increase with over half (54%) of the respondents now reporting these types of deals, which is a direct correlation to the decreasing percentage of respondents who report “strategic success.”

Financial results and synergies captured are improving based on respondents who reported “very favorable” or “favorable” results for profitability, cash flow, revenue capture and cost capture. In addition, the speed of integration has improved with 88% of respondents reporting the time to achieve leadership alignment took six months or less.
Top Integration Challenges

Integrating information technology and across functions and geographies continue to be among the most difficult challenges for business leaders to overcome during a deal. People integration also remains a big challenge with less than half (45%) reporting “significant success” in retention and very few reporting favorable results when it comes to employee morale and understanding.

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