Companies wanting to use deals as a way to enter growth markets, or build their presence when they're already there, this year face risks and rewards well worth contemplating.

The "pro" side can be significant, of course: lower-cost manufacturing, access to natural resources, and market access in new areas. Plus, there's often greater exposure to best practices, along with innovative lessons and capital.

On the potential "con" side, though: a worse than even chance that the deal might not close. Recent research by PricewaterhouseCoopers, measuring success rates, shows that more than half of growth-market transactions entering external due diligence fail to be completed --- a significantly higher percentage than that for developed markets.

'Right Side of the Delta'

The research results --- and the basis for a study titled "Getting on the Right Side of the Delta: A Deal-Maker's Guide to Growth Economies" -- grew from a December PwC webcast discussion that the accountancy conducted on the topic of the M&A landscape looking ahead to all of 2012. Its associated poll of participants covered 514 executives from both corporates and financial firms, including CFOs.

PwC said it carried out assessments of more than 200 deals --- both publicly announced ones and "a broader set of private deals that PwC has advised on."

Entry into emerging markets was being planned by 47% of those in a position to acquire, while 47% also said they were likely to get involved within the next one to three years.

Budget and U.S. Debt Top Concerns

Major M&A concerns for the next 12 months registered in this order: U.S. budget and debt matters (31.1%); gross domestic product issues and spending growth (16.8%);and a category simply labeled China (7.6%)

Respondents were asked how 2011 M&A plans were affected by the global economy, with 40.7% saying that deal plans were delayed or postponed, and 30.9% saying they did progress with plans using their preexisting strategies. Also last year, 14.3% said their deals weren't impacted at all.

In terms of transaction choices, the top three types were acquisitions (30.3%); sale of an asset or company (11.1%); and debt financing (9.6%.)

Multiples in deal prices were described as fair by 58% of respondents, with the rest split, 21% each, calling multiples either low, or high.

'Considerable Opportunity Cost'

The study measured at 50% to 60% the number of deals going into external due diligence in growth markets, yet failing to complete. PwC noted that all the failed deals represented "a considerable opportunity cost --- whether it is letting a good deal get away, or spending management attention, time and money that could have been better used elsewhere on a good deal." Other negative factors include reduced investor credibility.

Further, the cost of failing in a growth market "can be much higher due to the scale of the opportunity lose," the PwC report said.

And even after a deal is sealed, costly difficulties can result. PwC's estimate from available data suggested that post-deal problems added about 50% to the original investment. And that was before the buyer either lost control or divested the business at a loss.