Post-merger integration: A tailored approach to sustainable transaction success

Securing the added value of an acquisition Oliver Wyman has intensively examined M&A transactions with the aim of removing the complexity from post-merger integration and structuring the processes in order to provide security in a phase of extreme insecurity and to produce added value sustainably. Drawing on experience from hundreds of transactions, Oliver Wyman has pinpointed special patterns and success factors, mapping the DNA of successful mergers in the process. A diagnostic tool systematically addresses all factors, evaluates them and offers an optimal integration concept.

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Every Second Acquisition Fails

There were about 30,000 company acquisitions annually in recent years. That amounts to 80 transactions a day.The high number of acquisitions was the result of many factors. Globalization and the ensuing need to have a global presence were some of them, just as accelerated technological change and cost pressures in saturated markets were. Yet every second acquisition failed to achieve the desired results. Instead of generating synergies, the transaction drove down enterprise value. The success of an acquisition does not arise from skilled negotiations or the purchase price. The critical issue is the correct, tailored approach to post-merger integration. The reason for this is clear: Every merger is unique. The expected synergies can be generated and additional growth achieved only if two companies do indeed become one.

In retrospect, all parties clearly realize this. In a survey that Business Week conducted among merger-seasoned managers in the United States, nearly 40 percent blamed the PMI process for the transaction’s failure. Only 27 percent faulted the price of the acquisition and only 15 percent cited the particular company that they selected. The problems with the integration process were primarily triggered by soft factors to which insufficient consideration had been given.