Careful planning is the key to global M&A
Global cross-border M&A transactions continue to go from strength-to-strength despite political uncertainties. In this environment, research and due diligence are more important than ever.
lobal M&A volume in 2017 continued to grow year-on-year, reaching more than US$1.5 trillion for the first three quarters of 2017. Over 40% of transactions were cross-border.
Many signals point to this pace continuing in 2018, particularly in the US. However, the big wild card is clearly the extent to which political events in the US and around the world will result in increased protectionism or other upheavals in areas such as taxation, regulation and finance. So far, the deal markets appear largely unfazed, and rising US equity valuations provide plenty of ‘dry powder’ for stock deals.
It is difficult to predict what will happen in 2018 with the Trump administration continuing to develop its focus, the UK inching towards Brexit, and China’s mixed signals on outbound investment and capital movements. However, both US sellers and non-US buyers are expected to remain interested in the opportunities presented by investment in the US, and perhaps more so in a world where economic nationalism is on the rise.
Areas of focus for cross-border M&A
To be able to fully realize post-deal synergies and shareholder value, management teams should focus on due diligence, planning, and execution when developing and implementing integration and sequencing strategies.
- Due diligence
– Know your countries: Collect all relevant company data and regulatory requirements to ensure you are making informed decisions
– Start early: Bring in local and regional teams early in the integration process (and begin planning before the close of the deal) so that processes can run smoothly from day one.- Emphasise speed to value: Develop a plan for efficient integration that targets synergies that can be realized quickly, such as financial, sales and employees.
– Manage centrally, implement locally: Develop a cohesive central governance structure but engage in-country teams to execute.- Expect roadblocks: Consider mitigation steps early and move quickly to help overcome any hurdles.
As always in global M&A, the highs and lows for 2018 are likely to include many surprises. Sophisticated market participants will need to continually refine their strategies and tactics as the global and local environment develops. However, the fundamental rules of the road for successful M&A transactions remain the same and are eminently capable of being mastered by well-prepared and well-advised acquirers from all parts of the globe.