Mergers and acquisitions: What boards of directors should expect

Projections on emerging board matters

By Larry Hitchcock, Tonie Leatherberry, Joel Schlachtenhaufen, and Russell Thomson

Every year, Deloitte surveys more than 1,000 corporate and private equity (PE) executives about the current state of mergers and acquisitions (M&A) and their expectations for the next 12 months. Presented in the Deloitte 2019 M&A Trends report, the survey findings—combined with client interviews and insights from Deloitte senior leaders who frequently work with boards on M&A strategy—shed light on potential M&A opportunities and need to get M&A right. In our article, we find that boards may consider four strategies to prepare for future M&A transactions:

• Increase deal review rigor
• Develop multiple deal scenarios
• Improve technology proficiency
• Apply cross-border deal experience

To place 2019 in context, the 2018 global M&A activity as of September is accelerating at a pace that might match or even exceed that of 2015, the high-water mark for global dealmaking over the past 25 years. A Deloitte analysis of Thomson Reuters’s strategic M&A deals data indicates that through the end of August 2018 has already seen $2.5 trillion in deal value across more than 25,000 proposed transactions, lagging behind last year in terms of volume, but indicating an uptick in value.

With this context in mind, M&A deal activity and cycles over the past 25 years can provide a strong base of experience for executives and board members to draw upon when evaluating potential deals in the current market.

Rebounding deal-making activity and the highly visible nature of deals combined with the increasing confidence of management teams who view their deals as regularly “hitting the mark” point to the need for boards to assert their objectivity and to apply their experience when evaluating and approving potential transactions. As noted in this article, that suggests looking at proposed deals from different vantage points and recognizing areas that fall outside the direct experience of board members.

Drawing upon the experience of management teams and board members sets up the productive engagement needed when considering and pursuing acquisitions given the stakes involved. Certainly, positive outcomes work to the benefit of a broad set of stakeholders that benefit from M&A activity including shareholders, customers, and employees.