Making sure your M&A integration beats the odds


Have you ever tried to make mayonnaise from scratch? It’s one of those amazing examples of culinary alchemy in which apparently incompatible ingredients come together to create a rich, creamy, unctuous sauce. Once you learn how to do it, it’s relatively easy, but most people’s first attempt (and often second and third) results in an unappetizing curdled mess destined to be thrown away. The problem with mayonnaise is it’s an emulsion. That means it’s a mixture of ingredients that generally can’t be combined – unless you know the correct method.

Mergers & Acquisitions (M&A) is a lot like mayonnaise. On the face of it, it’s a straightforward task. Bring together two organizations, eliminate redundancies, save costs through synergies and economies of scale, and voilà, you have a new entity that enjoys the combined strengths of its parents and suffers from none of its weaknesses. Unfortunately, anyone who’s tried it will tell you the phrase “the devil is in the detail” could have been coined specifically for mergers and acquisitions.

Big upside – but big challenges too

The potential gains for a successful M&A deal are considerable. In How the Best Acquirers Excel at Integration, McKinsey states that companies who do M&A well “achieve growth of 6-12% higher than those that don’t”. Unfortunately, an HBR article on the same subject (Don’t Make This Common M&A Mistake) points out those gains aren’t easy to achieve, with 70-90% of acquisitions failing. Perversely, the risk of failure is higher when the acquired business is “a complimentary business the acquirer understands quite well.”

The successful conclusion of the legal process is just the end of the easy part of M&A. Post-deal integration is where things get really difficult. On paper, all that’s left to do is to integrate the two companies and release the value outlined in the business case. In practice, there’s a very high likelihood that both will be using different IT systems and an even greater likelihood they’ll have different business processes. Integrating disparate systems and processes is a complex task, even when those processes are current, complete, clearly understood, and well documented – and that’s rarely the case.

Overcoming the odds

This is where BusinessOptix can help you. Using our platform’s mining and mapping tools, you can quickly discover and document both organizations’ existing processes, which enables you to embark on process rationalization with a single source of the truth that’s current, complete, and based on real-world data. Next, our Business Process Management software can help identify bottlenecks, inefficiencies, and opportunities in both sets of processes, so you can dispassionately choose which is the best from each pair of alternatives.

Once you’ve selected the best business processes, our simulation and scenario modeling tools help you to optimize them, so your post-M&A operating model is better than either company had before. By providing insights into the potential outcomes of your proposed changes, these tools allow you to determine whether you are on track to achieve the stated goals of the M&A deal and create a more competitive company.

Using BusinessOptix, you can reduce process transformation lead time, take the guesswork out of process improvements, and dramatically increase the chances that your process and technology integrations are successful.

Of course, integrating processes and technology aren’t the only challenges facing M&A transformation teams. Creating cultural alignment is another, with resistance to change significantly contributing to failure. BusinessOptix can help here too. By enabling the production of work instructions and support documentation for your new, improved processes, our platform makes it easier for your people to adopt and execute them. Our collaboration tools also make it easier for your staff to become part of the change process, increasing their engagement and buy-in.

Realizing your M&A business case

Successfully achieving post-M&A integration is complex; the challenges are many and varied. Each deal is unique, with specific objectives and obstacles – but some things are universal. Having a complete and current picture of both companies’ existing business processes will increase your chances of success, as will the ability to quickly design and test your new operating model in a digital environment without risk to the day-to-day running of your businesses. Providing your change management teams with clear, easy-to-understand process documentation will help them persuade your staff to embrace, rather than resist, the new ways of working.

Being in the 10-30% of companies who realize their M&A goals, rather than in the 70-90% who fail, depends on removing risk wherever possible. Speed matters too. In “Seven Fundamental Tenets of Successful Integration” PWC states: “Mergers and acquisitions rarely fail due to a flawed strategy. Rather, missing targets and deal objectives are often a result of the untimely execution of the strategy. Successful integration must happen quickly and systematically. The period of time between deal announcement and deal close and the first 100 days post-close are absolutely critical to realizing quick wins and preparing the combined company to maximize value over the long term.

BusinessOptix reduces risk and increases execution speed by giving you more intimate knowledge of your current state and enabling you to design the best possible future state more quickly. Unlike making mayonnaise, you rarely get a second chance to learn how to do M&A well.

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