Increased oversight of M&A: an expanding role for audit committees

Read Ernst & Youngs InSights for European audit committee members Issue 13: December 2010 'Increased oversight of M&A: an expanding role for audit committees'.

Tasked as they are with oversight of financial controls, compliance with regulatory regimes and, in many cases, risk oversight, audit committee chairs are not eager to take on more duties. And yet, in mergers and acquisition (M&A), input from the audit committee offers tremendous benefit with very little extra work. It may be a matter of providing more focused attention.

There is still uncertainty around when M&A activity will return to pre-recession levels, but recent large deals involving cash-rich buyers signal at least a slow return of activity. Ernst & Young commissioned Tapestry Networks to ask over 40 board directors and subject matter experts whether audit committees, or boards as a whole, could contribute to their companies by strengthening their oversight of M&A. The answer was a resounding yes.

Conversations with research participants yielded three key findings:
  • Shareholders are concerned with high M&A failure rates
  • Most companies’ M&A processes are surprisingly inadequate
  • Audit committees should use this time to prepare for future M&A


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