The Role of Finance in Successful Serial M&A
What distinguishes companies that gain maximum competitive advantage from mergers and acquisitions—deal after deal— from those that do not? An Accenture survey of finance and strategy executives from serial acquirers around the world suggests that successful M&A is based on five key practices. Why do companies decide to intensify their merger and acquisition efforts, and what separates those that generate value from their M&A deals from those that do not? In a 2011 global Accenture survey of finance and strategy executives from serial acquirers around the globe (organizations that have acquired more than two businesses within the past five years), we sought to find answers to these questions. In this study, we also placed particular emphasis on postmerger integration (PMI) for the Finance function. (See “About our research.”) Our respondents’ most commonly cited reasons for M&A were to gain market share and to drive top-line growth. (See Figure 1.) Indeed, when serial M&A succeeds, it becomes a powerful source of competitive advantage. Serial acquirers with strong M&A capabilities outperform their industry peers in terms of overall growth and value generation. Figure 1: Reasons for M&A Primary business purpose of the merger(s) and/or acquisition(s) Gain market share Drive top line growth/increase revenues Expand global footprint Move into a new market segment Achieve cost synergies Acquire technology Acquire R&D Move into a new geography Reduce competition Other Source: Accenture Serial M&A Survey, 2011 1% Base = All Respondents; N=151 35% 34% 32% 45% 42% 41% 55% 64% 63%
About our research
In 2011, Accenture conducted a survey to explore the aspirations and best practices of companies that engaged in serial M&A activity. Our survey sample comprised 151 finance and strategy executives from 12 countries around the world, representing 21 industries. Forty percent of the respondents were chief financial officers; 25 percent, finance vice presidents or directors (or the equivalent); 25 percent, strategy vice presidents or directors (or equivalents); 11 percent, controllers. Respondents hailed from companies that recorded between US$500 million and US$50 billion in revenues during their previous fiscal year, with 84 percent having revenues greater than $1 billion. Forty six percent of the survey participants worked in businesses that had completed six or more mergers or acquisitions within the past five years. (See Figure 2.) In addition to the survey, Accenture conducted in-depth interviews during June 2011 with finance and strategy executives from a number of serial acquirers.
Figure 2: Respondents’ M&A experience Number of mergers and acquisitions (respondent) company completed in the past five years 10 or more 6-9 3-5 Source: Accenture Serial M&A Survey, 2011 21% 25% 54% Base = All Respondents; N=151
46% had 6 or more mergers within the past 5 years
Figure 3: M&A integration challenges Rank greatest challenges in making serial acquisitions Ranked 1st or 2nd Integration of people and culture Integration of technology Integration of finance processes and reporting Integration into marketing and sales Product portfolio integration Defining and Tracking synergies Regulatory reporting 19% 32% 31% 28% 26% 25% 38%
Source: Accenture Serial M&A Survey, 2011
Base = All Respondents; N=151
Yet a 2011 study conducted by Accenture revealed that serial acquirers, while strong in M&A governance, strategy management and transaction management capabilities,are challenged by integration management — a core success factor to successful M&A.1 Moreover, our survey showed that integration of people and culture along with integration of technology and finance processes and reporting, count among serial acquirers’ toughest PMI challenges. (See Figure 3.) There may be several factors driving the challenges of integration for serial acquirers....