The 2020 M&A Report: Alternative Deals Gain Traction
Alternative deals such as minority stakes, joint ventures and alliances are gaining popularity as a lower-risk route to capabilities, but they fail about as often as classic M&A unless governance, experience and diligence are strong.
Summary
M&A volume fell 80% in April 2020 versus December 2019, but a June to August uptick above 40 deals over $500 million a month suggests recovery. Alternative deals, such as minority stakes, joint ventures, alliances and corporate venture investments, are rising, yet fewer than half of JV and alliance deals beat their industry after one or two years. Dealmakers say about 40% of alternative deals fail, mainly for lack of a value roadmap (34%), strategic rationale (29%) or governance (27%). Dedicated teams and tailored processes lift success rates.
Editor's opinion
Alternative deals such as minority stakes, joint ventures and alliances let companies access capabilities for disruption and convergence without full acquisition and integration.
Key concepts
Alternative deals · Joint ventures and alliances · Minority stakes · Postdeal governance · Relative TSR