Decision-making and Approvals
Decisions, decisions, decisions: The M&A approval and leadership process
Ask corporate development professionals how their organizations could be more effective, and the answers may inevitably cluster around improving the deal decision process. Our past Corporate Development surveys document an overwhelming response to this need, and it is a logical one: M&A transactions frequently cut across multiple businesses, functions, and geographies and create complex decision matrices, particularly in large global organizations.
In fact, one-third of respondents indicate that six or more executives or committees must approve a transaction before it is completed. A healthy minority—15% on average and more among larger companies—report that 10 or more decision-makers must weigh in to approve a deal. These approvals must happen early and often, with 63% of survey respondents saying they must get approval before submitting a non-binding offer.
Organization and process are essential parts of successful M&A1, with organization defining who the decision-makers are and process determining when they step in. While the concepts are simple, they are surprisingly difficult to achieve in practice. Seventy-five percent of survey respondents have well-defined M&A approval processes, yet only 19% consider the efficiency of these processes to be excellent. Furthermore, close to one-third of respondents rate the efficiency of their process fair to poor, suggesting that many companies have a long way to go to extract value from defined M&A decision processes. "Too often, we see organizations succumb to the process/efficiency paradox where the means outweigh the ends. Many firms put a laser beam focus on process improvement and end up over-engineering the steps needed to get to a decision. Speed and innovation should be designed into the deal making process," says Geoffrey Helt, senior manager with Deloitte Consulting LLP.
For information about the Corporate Development survey report, please contact Chris Ruggeri, M&A services leader, Deloitte Financial Advisory Services LLP.
M&A business case forecasts: Managing uncertainty and maximizing deal value
Watch the Dbriefs webcast replay.
Exploring M&A excellence.
Merger & Acquisition library
One-stop for insight and advice.
Deloitte Corporate Finance
Leader in global middle market investment banking.
Corporate Development 2012 report
Leveraging the power of relationships in M&A.
As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.