World Monitor Magazine WM_Energy_ 2019_web | Page 52

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Seven steps for highly
effective deal making
Focusing on value creation from the start of an M&A transaction ultimately delivers
the best performance.
by Malcolm Lloyd and Hein Marais
Most acquisitions and divestments don’t maximize value
— even when some deal makers think they do. Yet creating
lasting value in deals has never been more important than it
is today. What ultimately makes the difference in maximizing
value?
In an effort to provide an answer to that question, PwC worked
in conjunction with Mergermarket, a research firm, to survey
600 senior corporate executives around the world about their
experiences of creating value through mergers and acquisitions
(M&A).
All had made at least one significant acquisition and one
significant divestment in the previous 36 months. In addition, Cass
Business School was engaged to compare M&A performance
based on eight years’ worth of deals data.
The message that came back was clear: Companies that
prioritize value creation early on — rather than assuming it will
happen as a natural consequence of the actions they take as the
transaction proceeds — have a better track record of maximizing
value in a deal.
Indeed, we found that acquirers that prioritize value creation at
the outset can outperform peers by as much as 14 percent (see
“Value creation needs a broader and more intense focus”).
We think that effective value creation must be built around three
core areas: staying true to the strategic intent, being clear on
all elements of a value creation plan, and putting culture at the
heart of a deal.
These factors are especially important today because turbulence
in global stock markets is creating uncertainty around valuations,
while companies are wrestling with challenges such as keeping
up with technological change and moving at speed into new and
untested markets.
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