Board oversight of major transactions and cybersecurity incident response

April 2018

One year ago, political and economic uncertainty contributed to declining mergers and acquisitions (M&A) activity, with the number of deals globally at a 20-year low for the first part of 2017. However, transaction volume accelerated in the final quarter of the year, and 2017 was the fifth most active year on record in terms of transaction volume, according to JPMorgan’s annual M&A review. Individual transactions have attracted a lot of attention, including industry consolidation plays like United Technologies’ acquisition of Rockwell Collins or Broadcom’s failed bid for Qualcomm (which in turn spawned rumors that Intel would acquire Broadcom). Cross-sector acquisitions, such as Amazon’s $14 billion acquisition of Whole Foods and CVS’s $69 billion bid for Aetna, have also loomed large. Analysts expect the number and size of transactions to increase this year, driven by an improving economy and tax reform in the United States. As a result, transactions remain a crucial part of corporate strategy and an important aspect of the board’s oversight responsibilities.

Several aspects of effective board oversight of transactions emerged from the discussion with LDN members:

  • Engage early on significant deals

  • Foster a culture of openness and candor between the board and management

  • Balance strategy, changing conditions, and organizational capacity to deliver

  • Pay particular attention to “mergers of equals”

  • Be willing to say “no” to a transaction