Value creation in deals hard to find, says PwC

Value creation strategies are vital but the study shows that 53% of acquirers are underperforming their industry peers.

Times News Service

MUSCAT: A PwC and Mergermarket study of 600 global senior corporate executives has found that only 61 per cent of buyers believe their last acquisition created value. However, acquirers that prioritise value creation from the onset of the deal outperform their industry benchmark by 14 per cent on average, 24 months after completion, while divestors that prioritise value creation can outperform industry peers by six per cent for the same period.

The creating value beyond the deal report explores how corporations – both on the buyer and seller side — approach value creation throughout a deal. Using industry data, interviews with senior corporate executives, and academic support from the Cass Business School, the research team analysed eight years of transaction data to determine what made them so successful.

Although value creation strategies are becoming vital to longterm success, the study shows that 53% of acquirers are underperforming their industry peers, on average, over the 24 months following the completion of their last deal based on total shareholder return. Similarly, 57 per cent of divestors are underperforming their industry peers, on average, over the 24 months following the completion of their last deal based on total shareholder return.