2011 Results
Our journalists did a deep dive into the winning companies'
strategies. Click through and also see some videos our AV team shot on
the road with the winners.
Long-distance runners
Most corporations that aim to increase revenue and market share at some
point will make an acquisition. How many deals they do over time will
depend on any number of factors, not least the scale of their ambition
and their available opportunities.
History is littered with
companies that have done lousy deals for all sorts of reasons --
overzealous empire building, overpaying, shoddy due diligence or getting
caught when markets suddenly turn. The 2008 financial crisis famously
caught just about everyone off guard. And while M&A resumed in
earnest this year, many companies continue to divest assets and
reconsider their strategic focus, particularly as the economy slows.
Many
more continue to pile up cash, still spooked by memories of 2008 and
concerns over the global economy. Besides, successful dealmaking is
never easy. The Deal magazine's Most Admired Corporate Dealmakers
survey, now in its fourth year, recognizes the difficulty, in good as
well as tough times.
This year's winners are companies that have
been selected by their peers -- lenders, lawyers, investment bankers,
accountants and corporate executives -- who understand the challenges
corporate dealmakers are up against and who are able to track who's
doing the most consistently superior job.
In analyzing our
surveys, we've found that successful corporate development teams tend to
have strong convictions about strategies and how deals they target
complement long-term goals. They have well-defined processes, are
meticulous about due diligence and identify (and retain) key experts and
talent.
These are some of the reasons we look at three years of
deal history: A company's M&A strategy takes time to unfold or
unravel. Share prices can rise and fall depending on the mood of the
moment, and integration may take years to reveal synergies or cultural
frictions.
Sometimes, too, the best dealmakers may be those who
have the discipline to sit out the M&A dance and wait for the right
partner to come along. All five of this year's MACD winners have, in
their own ways, demonstrated such strengths. Take J.P. Morgan Chase
& Co., which has won for a second consecutive year as best dealmaker
in the financial sector. The bank has made no notable acquisitions
since 2008, when it scooped up Bear Stearns Cos. and Washington Mutual
Inc. Yet, its success has been based as much on risks avoided as on
opportunities seized. Under chairman and CEO Jamie Dimon, the bank
bailed out of subprime mortgages early, preserving its balance sheet
when the crisis blew in and giving it the strength to pick and choose
deals. In short, risk management is integral to a company's deal
capabilities.
Then there's Oracle Corp., which paid $7.4 billion
for Sun Microsystems Inc. That deal took it for the first time into
hardware. Oracle was able to get investors on board because it has a
record of doing deals that work. Exxon Mobil Corp. bought natural gas
explorer XTO Energy Inc. for $41 billion when natural gas prices were in
the dumpster. Exxon has looked prescient since.
As for Walt
Disney Co., it continues to benefit from buying Marvel Entertainment
Inc. for $4 billion in 2009. Disney has a reputation for knowing how to
leverage deals through marketing and distribution; many continue to see
this deal as a home run. Lastly, there's Abbott Laboratories, which is
still absorbing Solvay Pharmaceuticals SA and Piramal Healthcare Ltd.'s
healthcare solutions business -- acquisitions that gave it new market
share in emerging markets, notably India. Abbott has been an MACD winner
for four years running, suggesting the market believes its corporate
development team knows what it's doing.
Survey recap
In
March, working with Dealogic and Standard & Poor's Capital IQ unit,
we published lists of the five most transaction-intensive large-cap
companies in five industries: bio-pharma, information technology,
energy, finance and consumer discretionary. To generate the lists, we
looked at acquisitions and divestitures closed by the companies in the
three years ended Dec. 31, 2010. Details and the lists are available
online at www.thedeal.com/mostadmired/sectors.php.
We then
invited readers to participate in an online survey, ranking the prowess
of these companies in dealmaking and rating them on four criteria:
strategy, execution, value and quality of the deal team. With 536
responses in when the survey closed in July, our survey firm, Rivel
Research Group, tabulated the results and named the winners and
runners-up in each sector. - Suzanne Miller
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