Consulting: What kinds of companies are likely to be the most active buyers?

Heinick: GE is back on a buying spree. It has somewhere in the neighborhood of $30 billion to spend over the next few years. Airlines are certainly active. I'd expect to see more like the United/Continental and Southwest Airlines/Air Tran combination. Financial services companies are being forced to focus on their core business and will begin to shed side, but still quite substantial, businesses.

Consulting: What other trends are you observing?

Heinick: After interviewing 40 companies about their M&A experiences, we found that they tend to hire proportionately more consultants for cross-border deals than for acquisitions within the same geography. This is not only drastically increasing buyers' costs, but they're also losing out on learning and cultural development training by outsourcing so much of the M&A work. By using consultants as surrogates for their own people, they aren't using this opportunity to teach their own people how to do work in the new company. Of course companies need advisors to provide assurance on cross-border deals, but without significant representation by the client on the M&A team, there's not a lot of knowledge transfer. Otherwise, when the consultants leave they may not know how to be successful. We find that when the buyer and seller have more of their own people involved in integration planning and implementation, it's not only less costly but it teaches the staff of both companies to work together in partnership.

One on One with Schaffer Consulting's Rick Heinick

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