KPMG's recent surveys show that in the past 10 years only 31% of corporate buyers succeeded in delivering value from their deals and 44% are still achieving very little to no synergy.
When acquiring managers were asked what they would do differently next time, three common themes emerged:
Acquirers are adopting a new approach to due diligence and planning, focusing not only on the target’s historical performance, but also the sources of future growth and challenges they may face. This means more work on synergies and pre-completion integration planning to prioritise the integration activities.
Factors that frequently affect the overall integration speed and direction should be considered beforehand. These include articulating the integration guiding principles, defining the target operating model, setting up an effective governance structure to enable fast decision-making and effective deployment of resources.
HR and cultural issues have always been major concerns for acquirers. Surprisingly, remuneration is less important of an issue in the immediate aftermath of a merger and acquisition (M&A). The three most common people-related issues acquirers face are retaining and incentivising the management team, addressing the cultural differences and communicating effectively to engage employees as well as manage expectations.
The "business as usual" maxim usually falls short as a guide for successful integration. The premium built into a purchase price is only justified if planned synergies can be delivered quickly and efficiently. Speed in implementation, concentration on the essentials, and exploitation of momentum are decisive factors in the success of the integration process.
Similar factors apply to the sale of companies and separation of company operations. Prompt planning and speedy separation are crucial to ensuring that the sale is a success and that the remaining business is not impaired. This gives the buyer confidence in the business performance that is often reflected in the price paid.
KPMG offers a package of post-deal services customised for the transaction and the client. We have local integration and separation specialists in our Hong Kong, Beijing and Shanghai offices to support you throughout the deal cycle. We use our experience and independence to help you identify and resolve issues ahead of time, make the right decisions at the appropriate time and maximise deal values.
Our global network of member firms has so far completed over 300 integration and separation projects around the world. We have extensive experience in leading cross-border situations and operational experience to address the specific needs of our clients.