December 28, 2020 at 5:53 pm #115961
I am based in Europe and have worked within last 10 years on a couple of deals. US domestic only or German holding with int. business acquired by a Chinese conglomerate etc.
Deal speed (driving on a deal, pushing forward etc to get it done) is also very dependent on the complexity of a deal, e.g.
cross border topics, language constraints, different jurisdictions, int. tax etc – BUT I have made the experience that US companies/consultants/bankers (being the target or the acquirer) are always keen to get a deal done – the sooner/quicker the better. Comparing this for instance in Germany there is more safe harbor needed, triple or quadruple checking things before moving forward. Bottom line – does the US have a better deal culture compared to other regions?
What is your experience and have you made similar observations?December 28, 2020 at 7:47 pm #115963
I am not sure I would label it as a “better deal culture” but maybe it has something to do with our history of teaching entrepreneurs and executives to consolidate or “roll-up cottage industries” as a viable growth strategy. I am surprised at how many stories I’ve read about how executives acquired companies to get them out of whatever financial stress they found themselves in.January 13, 2021 at 1:56 pm #116265
My experience is that Americans usually want to portray themselves as fast and ready to do the deal based on a handshake (I think many times based on their simplistic view of the US = the world while we Europeans makes the picture more complex worrying about different environments/laws/regulations/competitors in different countries). However, then enter the American lawyers that usually want to negotiate every little detail delaying everything. I do think Americans are more innovative in the financial markets and in some cases settle for good enough to get a deal done but in some areas they are less advanced e.g. M&A insurance is more used in Europe. Not sure who has the better deal culture though…January 13, 2021 at 6:21 pm #116267
Michael Maggiotto JrParticipant
@Gregory Weisser – Interesting question. Which is better is hard to answer. I believe they are just different and a matter of stakeholder preference. Would need to dig deeper into the 1 – 3-year success post-close data to begin to look at which might be better than the other. Mercer, Deloitte, and many others have done some studies reflecting high failure rates of M&A transactions in that 1 – 3-year window post close due in large part to culture misalignment and people related issues. Given this, if, for example, deals done quickly, as you share US teams attempt to do, retain intellectual property and key personnel more often and longer, gain synergy of culture between merged entities that is stronger and longer lasting, and the desired outcomes – financial, market share, or whatever else defined the thesis for the transaction – bear the fruit intended longer and stronger than deals done slower, as you share is common in Europe, then it would appear the faster deals would be better. If this outcome favors the slower deals, then they may be better. But if the data reflects little to no difference, then it just may not matter and simply be a preference for the stakeholders involved.January 23, 2021 at 4:24 am #116447
Yoke Chang TanParticipant
I think the proportion of which matters more really depend on the situation and I think there may not necessary be a right answer. Certain circumstances as brought up by participants here have correctly highlighted the various factors.
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