Can M&As really succeed?
Though mergers and acquisitions (M&As) have become more commonplace, Hay Group research reveals that post integration many fail to deliver the market value or benefits expected.
Companies tend to concentrate on integrating tangible assets - such as IT systems - and on achieving cost synergies, to the detriment of their customers. The balance between these issues and the integration of intangible assets, such as people, processes and structures is often not planned for far enough in advance during the M&A process. Knowing where to start is half of the battle. For a merger to deliver on its promise, organisations must address these issues – while at the same time managing the risks of integration and extracting the maximum value from it. It’s a difficult balancing act.
So how can you make sure your merger is a success? Hay Group is uniquely positioned to advise on integration of intangible and tangible assets. We have unique insight into the combination of organisation, people, jobs and culture. We use our understanding of management behaviours to surface hidden issues which can affect business performance during an M&A.
Two critical factors that help M&A succeed:
- striking the right balance between the tangible and intangible assets - this means taking into account organisational capital (including governance and the operating model), relational capital (including client relationships and other stakeholders), and human capital – of the companies to be merged – right from the start. For more guidance on this, read building effective organisations
- the impact of leadership - putting the new top team of the merged organisation in place as soon as possible, so they can begin to live the new vision and values. For help identifying the right leaders to drive your business forward, see our leadership and talent pages
- Only nine per cent of business leaders think their deal fully achieved its original objectives.
- 54 per cent of business leaders state that neglecting to audit non-financial assets increases the danger of making the wrong acquisition.
- Companies appointing a new management team as early as due diligence stage are more than twice as likely to reach full integration within a year.
How can I speed up the process of integrating different organisations? Find out more about our research and thinking around M&As. Download a copy of ‘Dangerous Liaisions’, Hay Group’s report into how to maximise the value of your deal.
Our Focus 2009 publication provides further insight into why M&As in the Pacific region often fail to deliver. It also provides a case study on the sucessful merger between Orica Mining Services and Dyno Nobel. Click on the link below.