Shaping Digital Convergence Through M&As

Last week we linked to a Europe-focused M&A report from PwC…this week is a more comprehensive report about the general U.S. market for digital media/convergence driven M&A in the market.
EIU and PwC conducted a global survey of 149 executives in February 2006 and supplemented the findings with over 30 in-depth executive interviews, and some main observations (some sounds very obvious)
Observation one: Digital M&A will continue to surge. Watch out for some messy results as acquirers over-reach themselves.
Observation two: Though they see the value of M&A, executives recognise partnerships and alliances as a worthwhile alternative means of profiting from convergence.
Observation three: The deals that work start with strategy–and today those strategies are heavily focused on software developers and business content providers.
Observation four: Winners in digital M&A need not only a great business strategy, but also a plan to integrate business models and cultures.
And also, an interesting interview with Dow jones CEO Rich Zannino, on Marketwatch acquisition and general M&A dynamics. “I’ve done 20 or 30 M&A deals, and one thing I’ve learned is never to rely on revenue synergies, because they never seem to materialise…I put more weight on cost synergies, and that’s what makes up for the lost revenue.” How are revenues lost? One way is that for the months following the deal, “the workforce tends to get distracted rather easily,” says Zannino. Change creates hesitation.
The full PDF is available for download here (Warning: PDF link…62 pages).

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