Research reveals CEOs are considering M&A – is the board ready?

Once CEOs identify trends, company board members should also listen. New research from the 3rd Oliver Wyman Forum CEO's Agenda Research shows that over the next two years, more CEOs will consider using mergers and acquisitions to accelerate their companies' growth. The report surveyed 415 CEOs representing approximately 10 percent of global market capitalization and revealed key insights into several areas where boards need to work closely with CEOs to keep their organizations competitive in one of the most volatile environments in recent years.

According to the report, “CEOs are focused on acquisitions, with 94% of executives planning mergers and acquisitions in the next one to two years. Nearly two-thirds of respondents reported plans to leverage industry consolidation as another mechanism to build scale and competitive advantage.”

Ana Kreacic, partner and chief operating officer at Oliver Wyman Forum, explained why M&A will be a priority for many organizations in 2026. “CEOs are no longer waiting for stability before acting,” she said in the report's release. “They are looking to turn disruption into a competitive advantage and acquire scale and capabilities that would take too long to build.”

Kreacic noted that the report found that 42 percent of CEOs who planned a deal planned to acquire new capabilities and intellectual capital. Fifty-four percent of the largest companies and more than 55 percent of companies in the areas of fastest-moving technological change plan to acquire new capabilities and intellectual capital.

So, with such a high percentage of CEOs considering M&A activity, there are several questions for boards to consider.

Do the board and CEO agree on what the process is for selecting acquisition or merger targets? A merger or acquisition with the wrong company can have a negative impact on an organization's future growth, so boards must ensure they have a robust and objective process, including rigorous due diligence, when evaluating potential target companies. The CEO's level of M&A experience and the board members' M&A experience are important, so consider whether you need to add third-party consultants or new board members with appropriate experience to the process. Consider what type of input will be needed from other key management teams (finance, human capital, legal) to ensure the company selection process is as broad as possible.

Did the board and CEO agree on the objectives and benefits of the merger or acquisition? The board and CEO must be on the same page about the rationale and potential benefits of the merger. What synergies could be exploited by merging or acquiring this particular company?Will this action expand our current market or create new market opportunities?Will this action change our current business model or operations for the better? How will the board communicate the benefits of the merger to gain shareholder approval? These and other questions should be discussed between the board and management before proceeding.

How will current board members be incorporated into the newly combined company's board? When two companies merge, each company's board members may need to do some self-analysis. Directors of the acquired company will likely need to find board seats elsewhere (although a few directors with significant experience may be absorbed onto the acquiring company's board). Meanwhile, directors of the acquiring company may need to consider whether their skill set and experience will continue to be an asset to the newly formed company. Nothing should be taken for granted. Additionally, having served on a board that successfully completed a merger may make a director more attractive to other companies considering acquisitions in the future. There may also be opportunities to serve on multiple boards or to move to a board where a director can take on a more prominent role.