Alliances: survey finds growing interest in alliances.

Given the decidedly mixed record of mergers and acquisitions in recent years, it's hardly surprising that CFOs are showing more interest in strategic alliances than deals. That preference was borne out in a recent survey by the Transaction Services group of PricewaterhouseCoopers, which found clear trends toward use of strategic alliances over even internal growth, and toward using alliances as a way to directly access new growth-areas, including geographic markets, new technology and new products--while lowering costs without adding new personnel.

The report was drawn from a mail survey of 201 senior finance executives and in-depth interviews with CFOs and business development executives at more than 10 companies. Donna Coallier, a partner in the Transaction Services group, noted in an interview that:

* Alliances are becoming more popular and more strategic. While people increasingly recognize the strategic value of alliances, some operating kinks frequently need to be worked out. "There is a need to measure them in terms of success--you need a qualitative sense of how to put more financial discipline around the alliance process," Coallier says.

* Alliances, like mergers, need a lot of due diligence and "getting involved in the details up front."

* Risk is a key consideration when opting for an alliance over a merger, Coallier says, noting that "there is a segment of the population that looks to them as phase one to M & A. You get to have a look at a good acquisition candidate."

She adds that while CFOs tended to be "happy and optimistic about alliances," there wasn't much data about results to prove they were working. That also goes to the discipline that is needed, she said, adding that revenue isn't the only measure to use, and that bench-marks like ROI and earnings growth also need to be considered.

Coallier noted that the study, the first formal one coming from the Transaction Service unit, looked at a broad range of industries, including automotive and manufacturing, retail and consumer, pharmaceutical and health, technology and financial. The largest subset of companies, 78, had between $1 billion and $5 billion in annual revenues, but the respondents ranged down to $250 million and up to over $10 billion.