Mergers and acquisitions (M&A) are a key way for organisations to generate cost efficiencies through economies of scale and improved market share. M&As can also create greater value for shareholders, which is a benefit recent research shows is particularly prevalent at Australian companies.
An Intralinks Holdings study published last month revealed 82 of the country’s businesses were considered Excellent Corporate Portfolio Managers (ECPMs). The term defined organisations that consistently deliver higher returns for shareholders through M&As compared with industry peers.
Intralinks examined 25,000 global public companies, with 1,469 ranked as ECPMs. Of these, 13 per cent of Australian organisations achieved recognition, which was higher than the US (8 per cent), Canada (11 per cent), France (12 per cent) and Germany (9 per cent), among others.
In fact, only the UK on 16 per cent outperformed Australia. The research showed several M&A characteristics that typically identified ECPMs, including:
- Greater risk execution
- Better engagement with public companies and financial sponsors
- Faster deals
- Optimal acquisitions based on business size
Philip Whitchelo, Intralinks vice-president of strategy and product marketing, said the research offers useful insight into whether or not M&A transactions deliver shareholder value.
“The findings indicate that excellence requires both some risk and the ability to adjust M&A strategies to take account of market conditions and valuation opportunities presented by dislocations such as the recent global financial crisis,” he explained.
Queensland-based Retail Food Group (RFG) was highlighted as an ECPM. The organisation’s CEO, Tony Alford, said M&As form a crucial part of RFG’s ongoing growth strategy.
“Acquisition activity undertaken thus far has resulted in a substantial increase in outlets and brand systems under the company’s stewardship, namely 330 outlets and two brand systems in 2006 to in excess of 2,500 outlets and 12 brand systems in 2015,” he stated.
Companies looking to proceed with M&As in Queensland should get in touch with an expert commercial lawyer to discuss their options.