Above and beyond: Dealmakers achieve success against all odds

Respondents say deals completed during the pandemic have met or surpassed expectations – and the majority of deals were opportunistic plays rather than strategic investments.

While deal values and volumes tell one side of the M&A story, the more important question is whether dealmakers are yielding value from their transactions. Overwhelmingly, the answer to this is: Yes.

Despite the near-constant challenges and uncertainties of the pandemic, almost two-thirds of respondents (65%) say that deals completed since January 2020 have delivered the expected value – and 20% say the results have exceeded expectations (figure 5). The key message here is that not only are deals getting done, but they are being done successfully, creating value and delivering desired returns.

When opportunity knocks: It pays to be agile and nimble

The landscape for M&A over the past two years has, to put it mildly, been unconventional and the uncertainties of COVID-19 have created both challenges and opportunities. That backdrop is reflected in the fact that more than half of dealmakers (52%) described their most recent deal as opportunistic, with a further 25% saying they were reacting to moves made by competitors (figure 6). Only 23% described their acquisition as a strategic deal planned at least 12 months in advance.

Figure 5: For M&A completed since January 2020, did deals meet expectations of success measures (revenue, business expectations, etc)? (Select one)

5% 20%

10%

Yes, and exceeded expectations Yes, and exactly met expectations Results were neutral No, did not meet expectations No, fell very short of expectations 65%

Figure 6: Which of the following best describes the rationale behind your most recent investment into Australia? (Select one)

25% 23%

52%

Strategic acquisition (in planning for at least 12–24 months) Opportunistic (based on market conditions and developing events) Reacting to market competitors (fear of falling behind/want to remain competitive) Other, please specify

Fast and furious: Act quickly but seek support

Opportunism and an agile deal team, it would seem, are being rewarded in the current market, but only for those that go the extra mile. While due diligence has been more difficult in the context of the COVID-19 pandemic, many acquirers have been keen to conduct even more rigorous diligence work than usual, given the potential for pandemic impacts, and have turned to different tools to do so. In many cases, this involves enlisting support from consultants and external advisors to reinforce M&A efforts.

Indeed, every single dealmaker in this report expects to make use of external advisors and consultants to source deals over the next 12 months (figure 7). Many others note that advisors have come in handy beyond just finding deals, providing critical support throughout the deal process including negotiations and even integration. One reason for this is practical. “We have had to use external advisors over the past year because it was not possible for our teams to travel,” says the CFO of an Australian corporate. When internal resources are stretched or unavailable/ inaccessible, trusted advisors play a pivotal role in the execution of deals. “External advisors have extensive information about markets and can also help in analysing the best options for the company,” says the director of finance at a Chinese corporate.

Figure 7: How have you sourced deals in the past year? How will you source deals in the year ahead? (Select all that apply)

Past year

57% 88%

97%

Next 12 months

External advisors/consultants Internal deal teams Online deal sourcing networks 88% 100%

97%