Businesses Not Realizing Potential of Cross-Border M&A

Global businesses are not realizing the full potential of cross-border mergers and acquisitions (M&A) as a means of driving growth due to weaknesses in the deal process. A new global study, The M&A Blueprint: Inception to Integration, published by global law firm Eversheds, shows that deal teams need a more holistic approach and stronger connections between the planning, completion and post-deal integration phases.

The study involved more than 400 multi-national businesses that have worked on cross-border M&A deals in the past three years. It shows that nearly half (43%) of businesses believe that the most common cause for deals not successfully achieving their goals is due to a failure to address post deal integration from the early stages of deal due diligence.

The report also shows that legal risk is an increasingly important consideration in the assessment of potential deals. General Counsel provide essential input at this stage and more than half (59%) of all respondents said they had spotted potentially damaging issues early enough to caution management about proceeding with the deal.

The research highlights that less experienced buyers are finding the process challenging but even those with a wealth of knowledge believe that there are improvements to be made.

Robin Johnson, M&A partner at Eversheds, said: “The current economic climate has made the business of doing deals much tougher, with the research highlighting an acute awareness of risk in the process. However, company boards are under pressure to secure growth and M&A is an essential business tool for achieving this, in particular for organizations thinking about tapping into or increasing their penetration in new international markets.

“Our research shows that the overriding factor contributing to the success of a cross-border deal, is the presence of a core team providing the ‘connective tissue’ to link all the phases together, taking the deal from the inception stage through to post-completion integration. 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.”

The full report can be requested by emailing imogenlee@eversheds.com