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Over the past decade, the nature and scope of mergers and acquisitions have changed dramatically, and the role of the integration manager (IM) is evolving to keep pace.
Accenture asked several senior Merger and Acquisition (M&A) practitioners who have worked on some of the biggest deals in the world the past several years to describe both the considerable changes in M&A management and the consequences for IMs. This report outlines these findings.
Key observations are that deals are increasingly global in nature, often requiring preservation of multiple customer channels, involve more extensive outsourcing and multiplatform IT architectures, and include value drivers tied to the acquisition of innovation capabilities and niche products.
Furthermore, while Accenture has demonstrated that the previously held belief that M&A destroys value may no longer hold, global stock markets and many analysts continue to monitor M&A delivery and can either reward or punish a company’s share price based on the visible milestones of integration delivery.
Because deals are increasingly more complex and the pressure to deliver results even greater, many IMs no longer have the luxury of focusing primarily on the details of an integration. They now often stand on the front line for their organizations and are required to provide strategic leadership—not just functional competence—to drive their organization’s agility.
The role of the integration manager is becoming increasingly more important. IM’s are now expected to directly address the challenges and own more of the decisions stemming from the changing nature of M&A, rather than passing them up the chain of command.
Likewise, many chief executives are less apt to throw a merger at direct reports without having a trusted leader at the helm. While it is of course important that IMs have the support of and maintain a close working relationship with the CEO and other members of the executive team, it is also important that they be able to arbitrate difficult decisions and be reasonably unafraid of ruffling feathers.
It is typically more experienced senior leaders who possess the necessary strategic and financial acumen as well as the execution management capabilities that allow them to work on both pre and post-deal aspects and manage the variety of internal and external teams and specialists on both sides. This broader vision can allow them to better prevent the potential chaos that occurs during integration. With so many moving parts, events and decisions to be made, the IM needs to keep the team focused on the ultimate outcome while being able to execute quickly without panicking or creating additional churn.
Finding all of the skills in a single person is for many an exceptionally difficult challenge. Where such individuals exist, they are typically among a company’s top performers and are already busy with a broad portfolio of management responsibilities.
Accenture has identified five challenges in how the changing nature of M&A is affecting the IM role, and some potential ways to respond.
Working Across Geographies— more and more deals are cross-border and involve multiple geographies and cultures. The IM has to understand, anticipate and manage cultural, market and regulatory differences across geographies and market segments.
Vendor and Outsourcing Complexity—the last 10 years have witnessed an explosion in outsourcing across geographies, functions and business-critical elements, the IM has to have a clear understanding of the full scope of outsourced capacity and apply a risk management perspective to vendor management.
Multiplatform and Social Media Integration—from an IT perspective, there has been a shift from a centralized, integrated, single platform architecture—to a portfolio of different standards and applications, where a newly merged organization may select and combine elements of both companies’ platforms.
Driving Transformational Change—for many companies, gone are the days of putting all in-flight and strategic projects on hold until a merger is implemented. Today, market forces often require companies to respond quickly and to deliver needed enhancements even during a merger.
Heightened Market Expectations— many market analysts have become more adept at understanding what drives M&A success and are scrutinizing value delivery more closely than ever before, appointing the right IM is critical to delivering a successful deal, and are looking for quick wins in support of share price movements.
S. Mehta is a Chicago-based senior manager in Accenture’s North America Corporate Strategy and M&A practice. He has assisted with more than 30 transactions in a number of industries such as energy, insurance, technology, life sciences, pharmaceuticals and printing. In addition to management consulting, Mehta has held positions in corporate development, corporate strategy and investment banking.
R. McManus is a New York-based senior manager in Accenture’s Global Corporate Strategy and M&A practice and the Global Strategy Operations Leader. McManus has published a number of articles on global M&A, innovation and international market expansion and emerging market entry.
January 15, 2013
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