Ego, cultural divide between generations to blame for M&A fall-through

“Ego” and the “cultural divide” between older and younger generations of business leaders are the leading reasons mergers and acquisitions fall-through, a panel heard next week. 

The Malta Business Network’s latest panel discussion honed in on the M&A landscape in Malta, discussing how businesses can prepare for such deals and what can be done to facilitate them locally.

Entitled; ‘The Art of the Deal: What is the state of Mergers and Acquisitions in Malta?’ The event heard how between 2008 and 2016, some 155 M&A deals had been announced, averaging about 15 per annum.

The number of deals contemplated by local businesses has increased since then with the panel estimating that around 60  mergers and acquisitions are now considered annually.

However, there has only been a marginal increase in the number of M&A deals that are actually executed.

The leading cause? The panel agreed that the mentality, especially among older business founders and leaders, that selling a business was an admission of failure held many back from executing deals.

The event was moderated by Thomas Cremona, Founder of advisory firm idisav.

He was joined by panelists JJ Miceli Demajo, CEO of M. Demajo Group, Simon Schembri, Partner at Ganado Advocates, David Pace, Partner and Head of Advisory, at KPMG in Malta, Joyce Grech, Head of Commercial Banking, at HSBC Bank Malta, and Louis de Gabriele, managing partner at Camilleri Preziosi Advocates.

Micelli Demajo told the panel that M. Demajo Group had transitioned from focusing solely on growing new business ventures to now also acquiring new businesses.

Throughout the panel, the issue of “ego” was repeatedly raised, with panelists expressing how the reluctance of business owners to sell for fear of being viewed as a “failure” was the leading cause of these deals falling through or not even making it to the negotiation table in the first place.    

The merging of different business cultures was also a complex issue that can often prove to be a stumbling block.

The MBN organises monthly panel events bringing regulators, policymakers, and industry leaders together to discuss the most pressing issues facing the country.