-- Securing Senior Management Commitment. "RDEs have large uncertainties, and unless senior management is convinced [that the risks and rewards are understood and can be managed], the chances are that a competitor will beat you to the winning post," said one executive involved in M&A in Central and Eastern Europe. -- Developing Local Intelligence and Market Knowledge. Fifty-five percent of the executives surveyed cited in-depth and reliable knowledge about the market and the target as a fundamental building block to assessing and managing the risks. Establishing an experienced local deal team "on the ground" is an essential first step. -- Fostering Relationships with Owners and Regulators. Acquirers should proactively reach out to owners and management to secure an exclusive deal -- an essential measure for reducing costs and risks. Fifty-five percent of the deals in BCG's survey were negotiated exclusively, with no competitive pressures. Educating regulators about the socioeconomic benefits of multinational investments is also critical. -- Concentrating on Growth -- and Shedding the Western, Cost-Cutting Mentality. Seventy percent of the executives said their companies used M&A in RDEs to gain access to a new geographic market, while 30 percent stated that their company's goal was either to increase market share or to gain access to a new product market or segment. "It's essential that the postdeal merger team is not filled with people who have a cost-reduction mindset," advised one executive. -- Focusing on the Human Dimension During Postmerger Integration. Acquirers must not assume that "the West knows best." Particular attention should be paid to cultural differences and retaining top local talent, especially because the demand for talent often outstrips supply in RDEs.The "Eyes Wide Open" report is part of BCG's Global Advantage initiative and complements the firm's recent report, "The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies Are Changing the World."
Contact Information: Contact: Eric Gregoire + 1 617-854-4570