2-Minute Takedown
81% of M&A leaders say activity is a part of their company’s strategy within the next three years
Technology is playing a larger role in M&A decision-making, both in driving deals and in killing them during diligence
struggling
The economy and the election will have the biggest impact on activity in 2020, though every single respondent said Texas has a favorable environment for their plans
to buy than be bought
2020 is expected be a year of momentum for M&A in the Lonestar State. A business-friendly state with above-average jobs growth and investment, Texas is in a state of expansion. But just how fertile is Texas ground for M&A activity in 2020 and beyond? We polled 200 M&A decision-makers in the state. Here’s what they reported.
8 in 10 plan M&A activity within 3 years
why
why
45%
61%
44%
42%
Cost
savings
Expanding geographic reach
Improve CX by expanding products or services
Gain access to technology
31%
Gain access
to talent
where
where
what kind
what kind
35%
36%
21%
2%
Within 6
months
1-2
years
6-12
months
2-3
years
6%
Not
determined
60%
6%
9%
25%
All of
Texas
Major metropolitan areas in Texas only
Outside of Texas
Wherever we find the right firm, inside or outside of Texas
100% of respondents said Texas has a favorable M&A climate compared to other states; here’s why:
ECONOMY
ECONOMY
"We have both land and money."
"The state is in a continuous growth pattern."
Government
"Texas is overall a business-friendly state. Regulations are reasonable compared to other areas, and government agencies are willing to work with businesses during M&A activities."
"Minimal regulations, low taxes."
Government
JOBS
"More jobs are coming to Texas than ever. We can hire more people."
"In Austin, startups are abundant. Everyone is expecting to get bought here."
JOBS
technology is playing an increasing role in M&A decisions in Texas
Top 3 red flags during diligence that thwart deals
Technology
62%
Financial Concerns
53%
Operational
38%
Top areas where companies leverage third-party advisers in M&A process
IT strategy development
58%
M&A readiness assessment
51%
Integration planning
49%
Areas of tech that will most impact M&A transactions in Texas
Data & analytics
34%
IT talent & organization
30%
Core systems (infrastructure)
16%
When asked what will have the greatest impact on Texas M&A in 2020, most cited a potential recession, the presidential election, interest rates, and developments in technology
say a downturn would increase efforts to acquire
said it would hold them back
49%
49%
37%
Other potential deal-killers in 2020
Change in company strategic direction
44%
Red flags during diligence
40%
Change in interest rates
36%
READ MORE
2020 Will Be a Year of Momentum for Texas M&A
Getting the Most From Your Consultants During a Merger
Tech Adds Value to
Deal Process
About the poll
About the respondents
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West Monroe, a national business and technology consultancy, wanted to better understand the current state of M&A activity in Texas. In Q4 2019, we surveyed 200 enterprise leaders who are aware of their company’s M&A plans. All respondents work in Texas at companies with 100 or more employees. West Monroe’s M&A practice advises on hundreds of deals every year for both corporate and private equity investors; its Dallas office is one of the fastest-growing in the firm.
ABOUT THE POLL
Manager
Director
VP
C-suite
What best describes your job level?
61%
24%
4.5%
10.5%
Houston
San Antonio
Dallas
Austin
Fort Worth
25%
10.5%
34%
8.5%
7.5%
Other
14.5%
In which of the following cities is your business headquartered?
22%
Build
scale
want to merge with a company in the tech sector
30%
want to gain access to technology via M&A
42%
WHEN
WHEN
62%
9%
30%
23%
33%
A similar company within my industry
A company specifically in the tech sector
A company not in my industry
A Fortune 500 company
A company that has different
but complementary capabilities