3 Questions to Ask Yourself During M&A

M&A can be a game changer, but it is risky business. According to a Deloitte Consulting study, nearly 80% of all mergers and acquisitions are troubled, with 50% failing to live up to expectations, and 28% fail outright. Failure to maximize deal value is often a result of difficulties faced when turning a great integration strategy into on the ground execution.

How do most transactions fail?

Executing an effective integration requires a high-level of detail to align organizational structures, processes and systems. However, some companies often spend so much time and energy focusing on integration that their overall business gets disrupted. Up to 50% of companies experience a decline in productivity within the first six months.

Troublesome deals take a toll beyond company performance. Organizational changes follow, as poor integrations have led to 47% of company executives leaving within 12 months of the deal closing. Even as executive steering committees lay out a roadmap with milestone goals and an end state vision, unexpected problems still arise. An astonishing 63% of executives cited difficult transitions and unexpected challenges as the greatest reason for failure.

Deal failure causes strain on both ends of the transaction. Improving the ROI of a deal requires an experienced team to assess the state of the deal, determine the degree of integration, and manage the project execution.

Why use an Integration Management Office (IMO)?

The purpose of an Integration Management Office is to ensure the integration stays on course and the right people focus on the right activities at the right times, so executives can maximize deal and shareholder value. The IMO uses a team-based committee structure that connects leadership with larger cross-functional teams that are responsible for each business function. The IMO helps achieve integration success by supporting the strategic execution of communication and synergies across an organization’s various work streams.

How will an effective IMO turn corporate goals into execution?

When considering the use of an IMO, it is crucial to focus on key corporate goals, such as:

  1. Effective Day 1 and Post Close Transition: Plan to accomplish a smooth close and minimize the integration risks that exist over the first 100 days.

A successful IMO will deliver a customized integration solution including industry best tools, processes and templates. They will help establish the team and manage the process from pre-close through integration. It is critical that post close planning takes place prior to the transaction closing, with agreed milestones in place.

  1. Synergy Identification and Realization. Meet or exceed your transaction synergy targets.

An effective IMO team will assist you in identifying, quantifying and prioritizing key synergies. They will work with you to build an assumption-based model and detailed KPI tracking to help get the maximum value out of the acquisition.

  1. Efficient Tactical execution. Ensure the correct resources are deployed at the appropriate time during the integration process.

An IMO will provide business experts to fill in any knowledge gaps within the existing teams and ensure all functions have quality resources.

Learn more about 9Gauge’s Transaction Advisory Services practices and its Integration Management Office (IMO) services.