Scott Moeller is Professor in the Practice of Finance at Bayes Business School, City St George’s, University of London where he also is the director and founder of the M&A Research Centre.  Scott is a frequent commentator on business issues on television and in the press. He has written or edited seven books with the most recent book, The Deal Paradox: Mergers and Acquisitions Success in the Age of Digital Transformation (co-authored with Michel Driessen and Anna Faelten) published in February 2023, being the first to discuss in detail the impact of AI, Big Data, LLMs, etc on the M&A deal process. Scott had a long career in banking in New York, Tokyo, Frankfurt and London prior to his move to academia including six years at Deutsche Bank and over twelve years at Morgan Stanley. He has held a number of board seats in Europe, Africa, Asia and the Americas and is currently the non-executive Chairman of the Board for a major JP Morgan subsidiary. Scott is a graduate of Yale College (BA with honours), the Yale Graduate School (MA) and the Yale School of Management.

1. Professor Moeller, we have carefully read your book The Deal Paradox: Mergers and Acquisitions Success in the Age of Digital Transformation. This book is fascinating. In your book, you mention that digital transformation has had a profound impact on M&A activity. So nowadays, how should companies adjust their M&A strategies to adapt to the new market environment and technology trends?

Scott Moeller ：It is indeed essential that companies should look at M&A differently, both in terms of the potential buyers and sellers, but also the deal process.  Digital transformation has already completely changed the way firms approach mergers and acquisitions. It’s no longer just about acquiring another company’s customer base or market share -- it’s about acquiring capabilities. Businesses need to ask themselves: do we have the technology, the data, the talent to keep up with this rapidly changing landscape? If not, then M&A becomes a tool to bridge that gap.

One of the biggest shifts I’ve seen is that traditional firms are now targeting these technology-driven acquisitions at an unprecedented rate. This isn’t just about buying software -- it’s about embedding digital DNA into their organizations. As we point out in The Deal Paradox, “M&A deals are increasingly driven by the need to acquire digital competencies that enable companies to adapt to rapidly shifting market demands”.

Digital deals require faster integration and more agile decision-making processes to capture value quickly. Moreover, M&A strategies today must incorporate regulatory foresight and compliance -- particularly around data privacy and cybersecurity -- to ensure smooth transactions in an increasingly regulated digital landscape.

2. It appeals to me that in the book while digital tools are transforming M&A, human judgment and relationships remain essential for success. Over the past decade, which "failed" M&A deal do you think turned out to be fortunate for the company or industry involved? Why?

Scott Moeller ：Well, this is always a fascinating question. Sometimes, the best deals are the ones that don’t happen. It’s easy to focus on success stories, but there are plenty of cases where companies dodged a bullet by walking away.

A fascinating example of a "fortunate" failed deal is Facebook's unsuccessful attempt to buy Snapchat in 2013. At the time, it seemed Facebook had missed out on securing its future in ephemeral messaging, but the deal’s failure prompted the company to innovate internally, leading directly to the launch of Instagram Stories. This ended up significantly undermining Snapchat's growth and securing Facebook’s dominant market position. Another compelling example is GE’s failed bid for Honeywell in 2001, which was blocked due to regulatory issues. Looking back, this turned out to be beneficial because GE avoided what would have been a highly complex integration, especially challenging given its later financial and managerial struggles. These examples illustrate that sometimes walking away from a deal can protect companies from costly strategic errors.

In relation to your part of this question about ‘industries’ being fortunate if a deal fails, let me give you another example. In 2022 during the middle of the UK’s competition regulator’s investigation of their proposed deal, NVIDIA withdrew its $40 billion offer for ARM. This turned out to be a win for the industry. Had the deal gone through, it would have created serious market dominance concerns, potentially stifling innovation in the semiconductor space but certainly attracting continuing attention of competition regulators around the world. Instead, ARM has continued to thrive independently, and NVIDIA has benefited from the AI boom without the regulatory headaches of that acquisition.

So, while it’s tempting to think that more deals are always better, the reality is quite different. Walking away from a deal is sometimes the boldest and smartest decision a company can make.

3. Benefiting from the rapid development of globalization, the past few M&A globally, leading to the emergence of industry giants in almost all sectors. However, today, against the backdrop of rising trade protectionism and the failure of multilateral mechanisms, where do you think such globalized M&A activities are headed? Could M&A potentially become a force in reconstructing the global economic governance system?

Scott Moeller ：There’s no doubt that the anti-globalization wave is having an effect on M&A deal activity. For decades, cross-border deals were all the rage as companies were expanding into new geographic markets, acquiring foreign competitors, and building global supply chains. But now? Rising trade protectionism, economic nationalism, and regulatory scrutiny are making these deals much tougher. Governments are now far more cautious about allowing foreign takeovers, especially in strategic industries like semiconductors, AI, and energy.

That said, I don’t think globalization is dead, it’s just evolving. Instead of full-scale large cap international acquisitions, we’re seeing a shift toward regional supply chains and strategic partnerships. Companies are still looking to diversify their risk, but they’re doing it with more localized strategies.

Furthermore, despite some backlash recently in some countries, ESG concerns are pushing M&A activity toward a more sustainable approach, potentially reshaping global economic governance structures by incentivizing companies that prioritize ethical, sustainable, and transparent operations. This shift towards ESG-centric dealmaking could indeed influence global economic frameworks by setting new standards for international corporate behavior, again with some localized exceptions.

So, while geopolitical tensions are reshaping M&A, they’re not stopping it. Deals are still happening. They’re just more strategic, more localized, and more focused on long-term resilience.

4. Yes definitely, ESG ratings are becoming more and more related to companies’ development. So are companies with low ESG ratings becoming “abandoned targets” in M&A? Have you encountered any cases where deals were terminated due to ESG risks?

Scott Moeller ：Absolutely. ESG factors are now deal-breakers in a way they weren’t even five years ago, despite the push-back on some aspects of ESG within certain countries.

For example, discussions emerged about a potential merger in 2024 between mining giants Rio Tinto and Glencore, which would have created the world's largest mining company. However, analysts expressed concerns over a significant "clash of cultures," particularly regarding their differing approaches to coal. Rio Tinto had previously exited coal operations, aligning with its commitment to sustainability, while Glencore continued to profit from coal mining. Indeed, that same year, Deloitte reported in a survey of 500 M&A corporate leaders, that more than 70% of them had abandoned acquisitions because of ESG concerns.

We’re seeing this across industries for companies with poor environmental records, weak governance, or labor issues. These are increasingly high-risk acquisitions. Unless they are looking for turn-around situations, buyers don’t want the reputational baggage. And regulators in some markets are making it harder for these deals to go through.

Sustainability and climate-related risks are no longer just a reputational concern; they directly impact the ability to complete a deal, the deal’s valuation and regulatory approvals.