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The rise of the cross border transaction - The serial transactor advantage - EY - Global

Total return after series of transactions

For those with the right approach, there is a serial transactor advantage around cross border deals.

M&A actually adds value. Whilst the mainstream press over past years has featured commentary on value erosion as the result of poorly planned and executed transactions, this is not the whole story.

And as the business world has changed dramatically recently, occasional deals will clearly fail no matter how the economy evolves. As a result, in today’s highly connected and increasingly volatile markets, some business leaders are fearful of undertaking significant multinational transactions. But others are more confident.

With awareness of past value destruction, the desire to mitigate risks in complex deals is understandable. And it is rational to seek to equate risks with potential returns.

But our latest research into M&A transactions clearly demonstrates that the balance has shifted:

  1. Rise of the cross border transaction
  2. Assessing M&A maturity
  3. The costs of cross border
  4. M&A in context: The Capital Agenda

Research found that organizations who over a five year period adopted a structured M&A program i.e. a ‘series’ (three or more) of largely cross border transactions beat the market return by 67% - a clear sign that transactions actually add value.

Total return after series of transactions


The revelation that a series of deals are additive is in itself significant. However it is not surprising that experienced transactors, with better skills and advanced processes can deliver greater success.

But our research also shows a clear difference in returns between those series focused largely on domestic deals, which beat the market by 24% over five years and, as mentioned above, cross-border strategies, which produce nearly three times as much added value.

The quantum of the benefit of doing cross border transactions appears to have escaped most managers’ attention. So perhaps there is an opportunity available to those businesses that are willing to develop the skills and experience to launch an M&A program.

 


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