A PwC and Mergermarket study of 600 global senior corporate executives has found that most acquisitions and divestments do not maximise value – even when some dealmakers think they do; but that acquirers who prioritise value creation at the onset outperform peers by as much as 14%.

The study gleaned that only 61% of buyers believe their last acquisition created value.

However, acquirers that prioritised value creation from the onset of the deal outperformed their industry benchmark by 15% on average 24 months after completion, while sellers that prioritise value creation can outperform industry peers by 6% over the same period.

In a statement on Wednesday, PwC indicated that although value creation strategies are becoming vital to long-term success, the study shows that 53% of acquirers are underperforming their industry peers, on average, over the 24 months following completion of their last deal based on total shareholder returns (TSR).

Similarly, 57% of sellers are underperforming their industry peers, on average, over the 24 months following completion of their last deal based on TSR.

Despite these figures indicating that many deals fail to realise the value they were intended to generate, those deals that prioritise value creation can generate a considerable amount of value.

Therefore, PwC mentioned that the factors contributing to creating value in deals must be understood.

The ‘Creation of value beyond the deal’ report explores how corporations – both on the buyer and seller side – approach value creation throughout a deal. Using industry data, interviews with senior corporate executives, and academic support from the Cass Business School, the research team analysed eight years of transaction data to determine what makes them so successful.

At a time of major industry convergence, digital disruption and dramatically shifting business models, deal value creation has never been more important.

“As dealmakers are coming under increasing pressure to deliver more value from their mergers and acquisition activity, companies that establish rigorous criteria for value creation early on in the buying or selling process are best positioned to maximise the returns from the transaction,” commented PwC global deals leader Malcolm Lloyd.

Three main considerations emerged from the research, namely to stay true to the strategic intent; to be clear on all the elements of a comprehensive value creation plan; and to put culture at the heart of the deal.

Groenewald commented that it was notable that only 34% of acquirers say value creation was a priority on day one (deal closing) in their latest deal, though 60% said it should have been a priority, which illustrates the need to continually evaluate and refine the way value creation is approached within organisations.