Belgian M&A Survey 2020

In the last quarter of 2019, PwC conducted a study on the Belgian mergers and acquisitions (M&A) market. We surveyed 94 key decision makers from corporate and private equity companies to find out about current strategies and future trends in all phases of M&A.

Since the results of the survey have come in, a new factor has impacted the world’s economy and our way of living: COVID-19. While the insights provided by the industry in the pre-COVID era remain very relevant and highlight the state-of-mind of dealmakers, we also need to reflect on the challenging times ahead in this dynamic sector.

An overview of important points of attention for future deals

The COVID-19 crisis has caused a major slowdown in global deal-making. According to M&A market watchers Mergermarket, worldwide M&A activity in the first quarter of 2020 fell by almost 40% compared to the same period last year. The post-COVID world requires us all to rethink some of our ways of working and force us to adopt new attitudes and reflexes in a deal flow. Sufficient attention will need to be spent on:

  • Re-evaluating projected cost and revenue synergies and immediate liquidity needs for all deals underway
  • Resetting deal priorities to reflect the new competitive landscape
  • Taking a robust and disciplined approach to forecasting various scenarios, to maintain focus on value creation
  • Over the longer term, buyers may need to rethink the cost of financing in a difficult market and consider alternative financing sources to get a deal done
  • Taking into account problems with physical access to assets: travel restrictions and closed facilities make it hard to assess and value targets

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  • 47%

    of Belgian M&A players regularly revisit their M&A strategy

  • 62%

    of our interviewees have a centrally controlled department for M&A transactions

  • 94%

    of Belgian dealmakers call on external support in the due diligence phase

The importance of a strategic M&A approach

Although the importance of a strategic M&A approach is clearly considered key, our survey shows that only half of Belgian M&A players (52%) have a clearly defined M&A strategy, while the other half still adheres to an opportunistic approach. 

Those that have a strategic M&A plan regularly update it to stay relevant: around 47% do so every few months to two years, and an additional 25% every two to five years. However, the survey shows that although their M&A strategy is updated, 67% confirm that these updates don’t lead to important changes in their longer-term M&A strategy. For those whose M&A strategy did change, all reasons were closely linked to changes in their overall corporate strategy.

Where COVID-19 touches upon many aspects and will impact the corporate strategy of all groups, it’s also a time to revise the M&A strategy. This crisis will lead to challenges, but also to many opportunities: new ways of doing business, new products, changing business models and new ways of working together. Redefining what core business is for a corporate and what is not will lead to significant changes in growth opportunities and, over time, in M&A activity.

In line with global trends in M&A, our Belgian respondents acknowledge the importance of a dedicated M&A team to focus on corporate growth strategy and constantly look for new targets and sources of growth. Around 62% of our interviewees confirm they have a centrally controlled department for M&A transactions, while some have a standalone department. Others have a dedicated ‘virtual M&A team’, which is multidisciplinary and only works together when the need arises.

The importance of a strategic M&A approach
Due diligence: a main focus

Due diligence: a main focus  

Around 94% of respondents call on external support in due diligence, both among corporates and the financial players.

Our Belgian M&A actors still focus on financial, tax and legal due diligence, whereas technological, commercial and strategic due diligence, ethics, cybersecurity, risk of personnel loss and management assessment are less of a focus. External support on organisational issues and synergy assessment actually round out the bottom of the list of support areas, along with post-merger integration.

In times where data security and cybersecurity are extremely relevant, it’s remarkable to see that not much time is spent on these during the due diligence process. Surprisingly little time is also spent on the quality and performance of the IT platform or system. Many respondents also acknowledge that they should look into this more in detail, but in practice, it’s not happening (yet) and most of those surveyed stick to the more ‘conventional’ due diligence areas, which are equally important, but nowadays likely insufficient.

Contact us

Nancy De Beule

Nancy De Beule

Partner, M&A Tax Leader Belgium, PwC Belgium

Tel: +32 473 91 02 90

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