Do your company’s plans for 2019 include the potential for a merger or acquisition? If so, then it would appear you have plenty of company. A recent study, The State of the Deal: M&A Trends 2019, was based on surveying 1,000 executives from corporations and private equity firms across the U.S. The results of the study, which was conducted by Deloitte, indicated that mergers and acquisitions were expected to increase both in the number and size of transactions in 2019. This would follow several years of mergers and acquisitions at record levels.
Despite the continued growth in M&A activity, roughly 40% of those surveyed indicated that half of their deals over the past two years fell short of the expected value or return on investment. External factors were most often cited as the cause, including general economic or specific industry factors, as well as regulation.
What makes a deal successful? According to the report, effective integration topped the list for what makes a deal successful (cited by 23% of respondents), followed by economic certainty (19%) and accurate target valuation (18%).
Industry and sector consolidation has been a driving force in mergers and acquisitions and that trend is anticipated to continue. Banking and securities, energy and resources, asset management and technology were the sectors most often cited as expected targets of convergence.
The survey also indicated that, as a result of tax reform, companies have an increased supply of cash and the number-one intended use of those resources was mergers or acquisitions.
If your plans for 2019 include the possibility of a deal, learn more about Schneider Downs’ experience in advising clients throughout the course of a merger or acquisition by contacting Joel Rosenthal.