Companies adapting to a COVID-changed world are rushing to reconfigure their businesses, fuelling M&A activity. But PwC research has shown that 53% of corporate acquirers underperformed their industry peers.
As leaders aim to forge new equations for growth by pursuing acquisitions, what can they do to ensure their investments create sustained value?
To answer this question, PwC examined 800 deals, including the 50 largest acquisitions across 16 different sectors completed over the past decade.
The results reveal one factor that plays a pivotal role in successful M&A activities — a capabilities fit between buyer and target — plus five steps leaders can take to integrate capabilities considerations into impactful deal-making.
What is a ‘capabilities fit’ and why does it matter?
- Capability access deals 3.1
- Diversification deals 0.1
- Product or category adjacency deals -0.4
- Consolidation deals -1.2
- Geographic adjacency deals -2.1
- Leverage deals 3.9
- Enhancement deals 2.5
- Limited-fit deals -10.9
Deal performance vs. stated strategic intent
Deal performance vs. capabilities fit
Leading local market index
Portfolio optimisation
When it comes time to revamp a portfolio, too many companies pursue deals to grow in size, rather than aligning their M&A strategy with their capabilities. At Strategy&, our data-driven community of solvers has found strong evidence that deals leveraging or enhancing a buyer’s key strengths produce significantly better results than those lacking a good capabilities fit.
Are you interested in optimising your portfolio to create lasting value? Let’s get started.
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