Report says utilities not fully capitalizing on M&A

Global law firm Eversheds has produced a report that highlights energy and utilities companies failure to take full advantage of the merger and acquisition process.

In a statement to PEi on Wednesday Eversheds said, “Global businesses are not realising the full potential of cross-border mergers and acquisitions (M&A) as a means of driving growth due to weaknesses in the deal process.”
The new global study, The M&A Blueprint: From Inception to Integration, shows that deal teams need a more holistic approach and stronger connections between the planning, completion and post-deal integration phases.

The study involved more than 400 multi-national businesses who have worked on cross-border M&A deals in the past three years. It shows that 43 per cent of businesses believe that the most common cause for deals not successfully achieving their goals is due to a failure to address post deal integration from the early stages of deal due diligence, with 35 per cent of companies in the energy and utilities sectors surveyed saying integration did not go as expected at the time of the deal closure.

In addition, only 49 per cent of M&A deals done by energy and utilities companies involve the legal team “before due diligence”.

Paul Wootton, head of energy and natural resources at Eversheds, said: “Our research shows that the overriding factor contributing to the success of a cross-border deal, is the presence of a core team providing the ‘connective tissue’ to link all the phases together, taking the deal from the inception stage through to post-completion integration. Businesses need to start joining the dots between the different stages of the deal cycle to move the focus from just simply ‘doing the deal’ to thinking about life for the business beyond the deal.

The report also provides a best practice set of recommendations to optimize the potential of the entire M&A process.

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