Global mergers and acquisitions are shaping up to be the name of the game for 2018, so having your team as prepared as possible for these transactions is a must. Take a close look at the M&A trends experts are expecting to see in action over the next 12 months.
It’s tech’s time to shine
Innovation and technology go hand in hand across just about every industry these days, so many companies will be vying for tech opportunities via M&A deals. Both the pharmaceutical and healthcare markets are particularly poised for tech-driven moves. Since acquisitions focused on technology present unique challenges to your team, such as unexpected cybersecurity issues and intellectual property obstacles, M&A professionals will have to be ready to take a more strategic and comprehensive approach to their due diligence when it comes to these types of deals.
Divestiture activity will increase
Once the path for cash-poor companies that urgently needed capital, divestitures are now seen in many organizations using a “portfolio-driven” approach. They’re bringing on new acquisitions while trimming the fat via divestitures with a strategic aim. Even today’s traditional M&A teams on the buy side should invest in training for specialized divestitures this year. While these transactions do have a lot in common with acquisitions, they are not just “acquisitions in reverse” and can actually be more complex than other M&A deals.
Acquisition and retention of talent will be a factor
With the strong focus on tech acquisition in today’s M&A community, it’s not surprising that people are being viewed as more crucial assets; they are the driving force behind growth and innovation. This means that there is a need to focus on employee retention right from the start if you want a strong M&A team. Include human resource leaders in the process from the very beginning, and make sure they have the M&A training they need so they can contribute to M&A deals on multiple levels and in meaningful ways.
IT will come in from the wings
Cybersecurity has become a hot topic in the M&A community and elsewhere simply because of the rash of high-profile breaches in security that have been hitting organizations worldwide on a regular basis. Cyber risk, however, is just one aspect of the function of IT, as this team can also be a strong supporting player in achieving key business goals. A secure, dynamic and robust IT infrastructure has become something that businesses rely on. Successful M&A teams of the future will align IT with their strategies instead of leaving this department out in the cold.
Cross-border is looking up
Although some moves, such as Brexit in the UK, did dampen some cross-border deals last year, 2018 is poised to see an increase in transactions across borders. Oil prices are becoming more stable, interest rates are low just about everywhere, and China is seeing a relatively smooth transition, economically speaking. The US is likely to remain the biggest market for M&A activity, but there looks to be a spike in growth in Africa, Latin America, Asia and the Middle East. Therefore, M&A teams will need legal and HR professionals who have expertise in international deals on their side.
Vertical integration is coming into sharper focus
In past years, M&A has largely consisted of sector and industry consolidation. 2018, however, is shaping to be a year that sees more vertical integration, with companies seeking organizations across their supply chains for acquisition. Known for its risk, vertical integration carries its own unique set of potential problems and challenges, particularly on the integration end. M&A teams need to be able to handle these special circumstances in vertical integration transactions so that all cost and operational alignments are protected and preserved.
Tools will be in high demand
With the influx of virtual data rooms and software that is specific to M&A transactions, teams no longer have to struggle with spreadsheets. Better tools mean a drop in costs, information at a glance and an increase in speed, all of which can be a window to better value in the deal. If your organization has not yet adopted these new tools, your M&T should begin reviewing and testing different solutions to streamline and improve your processes.
Original article posted on Prima-Recruitment.com’s blog on the January 5th 2018
Based on research from Jim Jeffries of the M&A Leadership Council