regarding future - M&A Activity
Despite economic uncertainty and a growing backlash of shareholders prone to protest when a deal is announced, executives are optimistic regarding companies' willingness to engage in mergers & acquisitions (M&A) this year, according to Accenture survey results released today.
Almost 30 percent of Fortune 1000 executives surveyed by Accenture, the world's leading management and technology services organization, believe that their company's appetite for M&As will increase during the next six months. More than 50 percent of those surveyed believe that it will stay the same as the year before. Only 18 percent feel that it will decrease in 2002.
The survey also sought to identify the reasons why some M&As were more successful than others. Although 86 percent of the executives surveyed believe they are conducting rigorous pre-deal analysis also known as strategic due diligence, interestingly half of them say poor identification of synergies and benefits between merging businesses are the primary reasons why M&As fail.
"Companies should look beyond financial due diligence and historic data, to future trends and sources of future revenues. Our study found that those who recognized that an effective strategy is as important as execution, fared better over the long term," said John Armstrong, Canadian partner in Accenture's Financial Services operating group.
Accenture believes that strategic due diligence is fundamental to the success of any M&A deal, yet it appears that many companies fail to apply the appropriate resources and rigor to this aspect of the transaction. According to the executives surveyed, 83 percent of executives involved in M&A deals are not able to distinguish between the value levers of the deal.
While companies want to be diligent about both the strategy and execution aspects of any M&A deal, not all companies can succeed on both fronts. The survey found that 11 percent of the executives surveyed believe that strategic integrity is the most important factor in accomplishing a successful M&A while 20 percent of them believe it is excellent execution.
About the survey
Accenture conducted the survey in conjunction with Wirthlin Worldwide. Wirthlin's periodic Executive Omnibus survey is designed to find out what the nation's top corporate leaders think about the issues affecting business today. Executive Omnibus provides a comprehensive source of information about current attitudes of leading executives in Fortune 1000 companies, including CEOs, chairpersons, and executive vice presidents.
Wirthlin interviewed, by telephone, a representative sample of 150 of the leading executives in the Fortune 1000 in April 2002. A broad range of industries, services, locales, and sizes of companies are equally represented. Breakdowns of executive opinion by type of industry or service, geographic location, company size, level of executive and other variables help explain attitudes and behavior.
About Accenture
Accenture is the world's leading management consulting and technology services organization. Through its network of businesses approach - in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities - Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of $11.44 billion for the fiscal year ended August 31, 2001. Its Canadian home page is www.accenture.ca.
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