
Ten Lessons from 20 Years of BCG’s M&A Report
A number of success factors have withstood the test of time, proving to be as significant in our updated analyses as when we first identified them.
Related Expertise: Mergers and Acquisitions, Business Strategy
For many companies, creating value from mergers and acquisitions has been an elusive goal. BCG has long studied M&A activity by year to understand evolving trends and to identify what the activity means for value creation in the short and long terms.
Since 2003, our annual M&A report has presented analyses of buy-side and sell-side transactions based on our BCG M&A database, now comprising more than 900,000 deals dating back to 1980. This year’s report examines the bold buy-side and sell-side strategies that expert dealmakers are applying in response to capital scarcity and market volatility. Collectively, our M&A reports offer a longitudinal view of the market’s evolution and of how successful dealmakers create value.
The dashboard enables you to track corporate divestiture activity easily. Explore divestment patterns across different industries, regions, and buyer types. See how these deals have evolved, with a notable decrease in corporate divestitures yet a surge in acquisitions by PE firms in recent years. You can also view all M&A activity by year in our comprehensive M&A analysis. The takeaway: We expect increased scrutiny of capital deployment to promote divestitures going forward, reversing the recent decline.
This year’s report has four chapters. It begins by discussing ten lessons that stand out as consistently crucial for M&A success. Then, BCG's M&A experts explore current M&A activity—globally and regionally—and reveal how successful dealmakers create value amid capital scarcity and market volatility.
A number of success factors have withstood the test of time, proving to be as significant in our updated analyses as when we first identified them.
M&A activity is rebounding after hitting a low point early this year. Sustainability, digitization, and capital scarcity are leading factors shaping the dealmaking outlook.
BCG experts in six regions discuss the state of play in their M&A market and share insights about near-term deal drivers.
Expert dealmakers persist through tough times, seeking bargains or planning divestitures. Our research and experience point to alternative dealmaking approaches that enhance flexibility.
Since our first annual M&A report in 2003, we have complemented our analyses of M&A activity and trends with strategic insights into how companies can create value from mergers, acquisitions, and divestitures. The reports have covered a broad range of macroeconomic environments and industry perspectives, focusing on both traditional and alternative deal types. Across the reports, our analyses pinpoint what infrequent dealmakers can learn from their more experienced counterparts’ success.
Corporate and financial acquirers are pursuing M&A targets more cautiously, but they have not closed shop.
Many companies are eyeing divestitures in the current environment. Are they likely to create value? What is the best path to success?
Companies are increasingly turning to innovative approaches to corporate collaboration to meet the challenges of the current crisis and adapt to disruptive megatrends.
Success requires careful preparation, thorough execution, and, especially, bold decision making in uncertain times.
The 2018 M&A Report: Synergies Take Center Stage
The 2017 M&A Report: The Technology Takeover
The 2016 M&A Report: Masters of the Corporate Portfolio
The 2015 M&A Report: Increasing Returns with M&A
The 2014 M&A Report: Don’t Miss the Exit
Winning at M&A in Emerging Markets: BRICs Versus Mortar? [2013]
Riding the Next Wave in M&A: Where Are the Opportunities to Create Value? [2011]
Seize the Opportunities in M&A: Accelerating Out of the Great Recession [2010]
The authors of our annual mergers and acquisitions reports examine M&A activity by year to spotlight trends and opportunities. Meet some of our M&A experts.
During the first nine months of 2023, BCG’s Transaction Center conducted the research that underpins BCG’s 2023 M&A Report.
The data set we used as the basis for the analyses in BCG’s M&A research (the “M&A database”) comprises approximately 926,000 M&A deals covering the period from January 1980 through June 2023. In assessing general market trends, we analyzed reported M&A transactions from 1990 through the first half of 2023. For the analysis of deal values and volumes, we excluded transactions marked as self-tenders, recapitalizations, exchange offers, repurchases, privatizations, and spinoffs.
In addition to using our proprietary data and analytics, we collected and collated financial data and relied on information from various data providers, including Refinitiv Eikon, Refinitiv DataStream, and S&P Capital IQ.
Short-Term Value Creation
Although analyzing different issues required the use of distinct samples, we employed the same econometric methodology to all return analyses.
To determine the “announcement return,” we derived the cumulative abnormal return (CAR), by taking the difference between the actual return on the acquirer’s stock (Pacq) and the return realized in the sector index (Pindex) as an approximation for expected returns, starting three days before the announcement date (–3d) and ending three days after it (3d). (See Equation 1.)
EQUATION 1
We applied common-practice statistical significance tests to all of our quantitative results in this report. To assess whether means were statistically different from zero, we used one-sample t-tests; and where appropriate, we used two-sample t-tests to determine whether the difference between means was significantly different from zero—that is, whether two groups did in fact have different means.
Generally, for longer-term analyses (such as one- and two-year RTSR) and for the short-term analysis (that is, CAR), we used relative measures of size impact (such as deal value compared to the enterprise value of the acquirer) as well as absolute measures of size (such as deal value) to determine whether a transaction was sufficiently material to have had an impact on overall performance.
The authors are grateful for the support provided by Paderborn University.
SUBSCRIBE