OVERDUE DILIGENCE
The lessons dealmakers have learned
By Ben McLannahan

Like penitent schoolboys, dealmakers are adamant that they’ve learned lessons from the last M&A binge in the late 1990s. Given their time again, they’d plan earlier, pay more heed to cultural nuances, and watch more closely over post-deal integration. That’s one of the key findings of a new survey of 101 dealmakers around the world carried out by KPMG Transaction Services.

It’s about time trade buyers raise their game, say John Kelly, head of integration advisory at KPMG in London. The growing spending power of private equity players has meant that buyers are now more likely to find themselves in big auctions with tight deadlines, up against people who do deals for a living. Principals are “making decisions based on limited time and access to data,” he notes. Faced with that challenge, increasingly firms are using the period between closing and completion to run more checks on data and get a head start on integration. Many are hiring outside experts known as “clean teams” to mediate, using them to share information while awaiting regulatory approval.

There are dangers to this approach, warns Ulrich Spiesshofer, head of corporate development at Swiss/Swedish engineering company ABB. While it’s fine to avail yourself of external expertise, buyers should be wary of “releasing managers from their responsibilities to integrate,” he says. “Sometimes companies delegate too much to outside players.” That may be another M&A lesson that needs to be learned.