EAI says research into M&A activity is lacking

Interesting bit in today's Professional Pensions (oh how I dreamt of saying those words when I was 21) about the lack of analysts research into merger and acquisition activity. I'll post the article below and try and track down the actual report. Given that evidence, even from consultants who may have an interest in M&A taking place, suggests many (if not most) deals are value destroying, it is surprising that institutions generally just nod them through. I've always thought this is very fertile territory for the Left - this is a real-life example where our interests as working people and investors coincide.

Anyhow here's the article:

EAI study finds research into M&A too low

by Jonathan Stapleton 16-05-2007

THE ENHANCED Analytics Initiative has released summary findings of a study on mergers and acquisitions research.

EAI – an international group of asset managers, pension schemes and other investors – aims to encourage investment research that considers the impact of extra-financial issues on long-term company performance.

The study, produced for the EAI by investment consultancy onValues, found the overall volume of enhanced M&A research was low – and noted that, while coverage of corporate governance issues was widespread, consideration of environmental and social issues was rare.

It said the overall analysis of extra-financial issues in M&A research was “lacking in sophistication and transparency”.
EAI chairman David Blood said: “In today’s market conditions, investors are regularly challenged to decide whether a proposed transaction promises value creation or destruction.

“The purpose of this summary study is to strengthen communications with research providers on the kind of research that best supports our investment decision-making and ownership practices — fundamental research that takes the long view and integrates material extra-financial issues.”

OnValues senior consultant Gordon Hagart added: “Investors want to understand how factors such as combining corporate cultures and governance systems and management incentives may affect the likelihood of a transaction delivering the value it promises.”