Strong post-pandemic M&A market sees increased importance of systematic due diligence for realising deal value

PwC Belgium 2021 M&A Survey

  • The pandemic has accelerated the trend in acquisitions to boost capabilities in the ‘new normal’ as well as expand geographic presence
  • Corporate culture and understanding people aspects of deals is a critical success factor in M&A, and needs formal objective assessment
  • Increased attention is being given to ESG as a value driver rather than simply a risk factor, but systematic and standardised ESG due diligence is crucial to identify risks
  • Despite businesses’ increased reliance on technology, cybersecurity and IT factors need to benefit from more scrutiny early in the deal

Thursday 23 September 2021 – As the Belgian economy emerges from the crisis, M&A activity has risen, driven by revised strategies at corporates leading to carve-outs of businesses to be sold, a lot of cash in the market, strong demand for targets - pushing prices up and making a structured approach to realising value even more important. PwC Belgium’s 2021 M&A Survey takes a look at how the pandemic has affected the M&A market from the perspective of both financial and corporate M&A players.

During the pandemic both financial (75%) and corporate (63%) players changed their M&A strategy. Financial buyers are mainly interested in targets with recurring cash flows (83%). They want to expand their geographical presence (48%), often in light of a buy & build strategy, and are looking for assets to expand digitalisation (30%) as well as for capability extensions (23%). Corporate respondents also showed clear interest in targets with recurring cash flows (68%) and even greater focus on geographic expansion (69%) and capability extensions (49%). These priorities may be supported by optimism about the medium term; only 12% of all respondents expect an economic downturn in the next 12 months.

One of the trends we’ve seen in recent years is an increase in deals focusing on acquiring new people, capabilities, technology, etc. to realise the company’s objectives,” comments Nancy De Beule, Partner Mergers & Acquisitions at PwC Belgium. “The pandemic has accelerated this trend. Acquiring new capabilities to fill the gaps encountered in the ‘new normal’ turned out to be key for strategy and value-building. This is especially true for capabilities in the fast-evolving world of increased digitalisation, remote working, online services in many industries, and shifting from asset-based models to providing services. These deals are also often characterised by alternative deal models, such as joint ventures, alliances, minority stakes, and more - the common factor is the will to build organisations with the capabilities to thrive in our new reality.

Due diligence: essential for value creation

Realising the synergies post-deal remains very difficult for many buyers. Factors that erode ​ value can be underestimation of cultural differences, unanticipated IT costs, misjudgement of target management’s skills, and so on. The focus stays on the traditional due diligence (finance, tax, legal), but compared to last year, greater attention is being given to value creation in the early phase of a deal. The due diligence is becoming thus more sophisticated.

As acquiring capabilities has become an increasing part of deal activity, there has been greater emphasis on testing the pre-deal assumptions, the quality of the target’s business and the potential for synergy. Almost half (46%) of financial players and corporates consider this to be very important, and one third (32%) consider it more important than one year ago, with similar answers when it comes to the importance of HR due diligence (quality of management, cultural differences, etc.).

People at the heart

In recent years, research has confirmed that cultural challenges are consistently listed as top reasons for failed M&A deals. This is widely recognised by respondents; 35% of financial players and 46% of corporates say HR due diligence during the transaction process is very important. The portion of respondents saying a thorough analysis is carried out of organisational cultures “always” or “most of the time” is 83% for financial buyers and sellers, and 74% for corporates. Almost 60% of both financial and corporate buyers and sellers always assess the leadership of both companies and a further 24% do it most of the time.

In practice, we see that this assessment is very often carried out by the people who are directly involved in the deal on the buy side, and that the assessment is based purely on the conversations they have had with the target management,” explains Nancy De Beule, Partner Mergers & Acquisitions at PwC Belgium. “A third-party assessor is better placed to come to an objective view regarding the quality of the leadership, on the basis of interviews as well as dedicated assessment tools and benchmarks. Our recommendation is to put culture at the heart of the deal. Identify key skills, ensure clear communication and incentivise core talent to stay engaged. Our analysis confirms the importance of seasoned, experienced people to generate maximum value from a deal. You need the right leadership team and a solid plan to identify and retain key people to make the transaction a success. Buying a brand but losing the people can destroy the value of a deal.

ESG on the agenda, but not yet systematic

In deals, the main purpose of ESG (Environmental, Social and Governance) due diligence is to identify if there are material risks from the buyer’s perspective. Both corporate or financial investors want to see that the target company has adequately identified its main ESG risks, deployed an approach to manage the issues, stated clear policies, assigned clear responsibilities for the topic (e.g. ESG responsibility at executive committee level), and set clear objectives and targets to monitor progress.

Performing ESG due diligence is a common practice in Belgium, with more than two-thirds of respondents (68%) carrying out at least one review. However, only 41% of financial dealmakers systematically perform ESG due diligence and only 19% of corporates do so. The survey also indicates that there is no clear common approach or methodology adopted in transactions. While many rely on their own ESG standards for ESG due diligence, others use standard ESG frameworks such as SASB and GRI to identify material ESG issues.

PwC’s Private Equity Responsible Investment Survey showed that value creation is the main driver for integrating ESG considerations in the due diligence process, while this M&A survey which also includes corporate M&A clearly shows value protection as a goal. The results of both surveys illustrate however that the Belgian market is less mature than the global market, certainly with respect to corporate buyers where the focus is still more on value protection and less on value creation.

More attention needed for IT and cyber

One of the areas that needs more attention is cybersecurity and technology, especially during the initial phase of the transaction. Having an overview of the system cybersecurity level, the cost of integrating systems and upgrading IT to an acceptable security level is crucial, both in the transaction phase and in the post-deal integration phase. However, responses indicate that IT and cybersecurity due diligence are still not benefitting from the priority they deserve in early phases of the deal. Only 25% of financial and corporate players list IT due diligence as “very important”, a figure which drops to 18% and 13% respectively when it comes to cybersecurity due diligence. This is especially worrying in the context of the value creation strategy, given that 60% of all Belgian respondents state they consider cybersecurity risks when it comes to actually integrating businesses later on.


About PwC Belgium’s 2021 M&A Survey

The 2021 M&A Survey was conducted from mid-March to mid-May 2021. In total, 111 respondents shared their thoughts. 40 respondents are financial buyers & sellers active in the Belgian M&A and private equity market, profiles such as managing partners and investment managers/directors. A further 71 respondents are corporate buyers & sellers, mainly CFOs, heads of corporate development and heads of M&A.

Download the full M&A Survey 2021 report here.



Erik Oosthuizen
0474 56 42 76


Get updates in your mailbox

By clicking "Subscribe" I confirm I have read and agree to the Privacy Policy.

About PwC Belgium

Building trust and delivering sustained outcomes

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 151 countries with more than 364,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us  what matters to you by visiting us at

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details.

You may view our privacy statement here:

© 2023 PwC. All rights reserved.