The difference was significant: approximately $96 million gain per acquisition by companies with highly experienced corporate development teams.

This comprehensive and novel study provided the first in-depth investigation into the impact of experienced and specialized M&A teams on acquisition performance. 

In particular, the research focused on dedicated corporate development teams with responsibility for the “inorganic growth strategy, identification of targets from internal pipelines and information memorandums, performing synergy and valuation analyses on transactions, participating in deal negotiations with the target, undertaking financial due diligence, analyzing post-merger integration, and comparing ex-post M&A outcomes to pre-acquisition forecasts”. 

Although the survey found only a third of the US public companies had “specialized M&A staff” during the period, the paper noted the percentage was increasing over time -- exceeding 40% during the most recent years.

The study was based on 11,098 unique acquisitions of public firms, private firms, and subsidiaries (totaling $6.38 trillion in deal value) during a period of rising transaction activity. 

The hypothesis that specialized M&A teams are among the most important factors related to acquisition performance was tested against multivariate regressions that were explicitly controlled for an array of characteristics (along with industry-year fixed effects). 

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Footnote: Domineering CEOs negate gains

It’s notable that companies with domineering CEOs, who may be motivated by empire building or private benefits, experience an “insignificant” performance benefit from more experienced M&A teams.