From large-scale acquisitions to smaller, mid-market deals, M&A activity has been on the rise. The latest full-year data showed that 2018 had more deals than any other in the past five years, according to Pitchbook data. Along with the increase in M&A activity, many industries have seen a large shift in the form of consolidation, namely in the Health Care, Media, and Technology sectors.
Given companies’ increased focus on M&A as a path for growth and competitive advantage, it is important that executive management and M&A teams are well prepared when it comes to executing a transaction, especially because such events can frequently occur without prior notice.
In order to identify ways to avoid common challenges and mitigate risks, we recently completed a survey study, in partnership with Mergermarket, to understand how deal makers in the market have seen the M&A process change over the years.
Some of the most pressing challenges highlighted by senior executives include:
- 67% report M&A transactions are taking longer to complete due to increased caution from buyers, amount of information and requested information from the buy-side, and the lengthy time required to organize materials.
- 78% recall instances of bidders uncovering missing contractual agreements, adding to the length of deals.
- 65% believe that the timeline for sell-side preparations has had a mostly negative effect on the sell-side.
- 87% state that having started organizing the company for a sale well in advance would have made the process smoother.
As the study findings show, the ever-growing timeline on M&A transactions combined with the increasing volume of deals and participants involved detracts focus from the company’s core business activity, leading to a host of new challenges for companies, their investors and advisors alike.
IHS Markit works with thousands of companies to overcome challenges and streamline the process related to M&A. Many M&A professionals have chosen our Prism virtual data room to help prepare for future deals and to mitigate any concerns around security.