The Role of Finance in Successful Serial M&A

What distinguishes companies that gain maximum competitive advantage from mergers and acquisitions—deal after deal—from those that do not? Accenture research suggests that successful M&A is based on five key practices that are best led by the finance function.

Accenture has conducted research to determine why companies intensify their M&A efforts, and what separates those that generate value from their M&A deals from those that do not.

This research was conducted in 2011 to explore the aspirations and best practices of companies that engaged in serial M&A activity. Our survey sample comprised 151 finance and strategy executives from 12 countries around the world, representing 21 industries. Forty percent of the respondents were chief financial officers; 25 percent, finance vice presidents or directors (or the equivalent); 25 percent, strategy vice presidents or directors (or equivalents); and 11 percent were controllers.

Respondents hailed from companies that recorded between $500 million and $50 billion in revenue during their previous fiscal year, with 84 percent having revenue greater than $1 billion. Forty six percent of the survey participants worked in businesses that had completed six or more mergers or acquisitions within the past five years.

In addition to the survey, Accenture conducted in-depth interviews during June 2011 with finance and strategy executives from a number of serial acquirers.

Serial M&A merits study for several reasons. First, serial acquirers drive the market. While they represented just 9 percent of all acquiring companies during 2003-2009, they accounted for about one-third of all deals executed and nearly one-half of total deal volume during that same period, according to a 2011 Accenture study. [1]

Serial acquirers also tend to pursue big deals that span several countries, often in emerging markets. Finally, these M&A players face unique challenges. For instance, they take on multiple complex deals simultaneously and can encounter regulatory and cultural barriers while managing cross-border deals.

While serial acquirers are strong in M&A governance, strategy management and transaction management, they are challenged by post-merger integration management—a core success factor to successful M&A. Our survey showed that integrating people and culture along with integrating technology and finance processes and reporting, count among serial acquirers’ toughest post-merger integration challenges.

[1] M.Dier, M. Kubel, A. Meinzolt and H. Langthaler, Inside Corporate M&A: The Formula of the Fittest, Accenture, 2011.

Aspiring serial acquirers, or those that have struggled with post-merger integration, can avoid costly mistakes and execute M&A deals that deliver the promised advantages by implementing five critical integration enablers.

The enablers are even more effective when they are orchestrated by the acquiring company’s finance function. Indeed, when M&A activity intensifies, chief financial officers are well positioned to lead and extract maximum business value from merger integration efforts on behalf of their enterprises.

The five enablers are:

1. Strong integration governance. Setting the overall direction for the integration of people, corporate cultures, financial processes and technologies upfront and throughout the process of post-merger integration.

2. Dedicated team. Establishing an internal team (supplemented if needed by a professional service team) that is charged with orchestrating the post-merger integration.

3. Steadfast focus on target reliance. Monitoring synergy outcomes and making midcourse corrections as needed to achieve targets.

4. Standardized approach to post-merger integration. Using templates and a proven methodology for integrating newly merged or acquired entities.

5. Robust enabling infrastructure. Setting up global operations, processes and systems to support effective and efficient post-merger integration.

Oksana Kukurudza is a senior executive in the Accenture Finance & Enterprise Performance practice based in New York. She is the global lead of the Accenture Finance Post-Merger Integration offering and North America lead of Finance Strategy offering. Over the last 18 years she has focused on supporting the integration and transformation of companies’ finance organization, processes and capabilities to operate more effectively at lower cost.

Jeff East is a senior manager in the Accenture Finance & Enterprise Performance group based in Atlanta. He specializes in post-merger integration and finance strategy. He is a certified public accountant and has more than 20 years of experience in M&A advisory, strategy, merger integration and finance and accounting operations.

Aneel Delawalla is a senior manager in the Accenture Finance & Enterprise Performance group based in Los Angeles. He has more than 10 years’ experience in defining back-office strategy, conducting capability assessments and designing integrations and transformations, with a deep focus on the finance function.

Sara Cima is the offering development lead for the Accenture Finance & Enterprise Performance group based in St. Louis. She has consulting experience in finance post-merger integration in industries such as life sciences and consumer products, and has conducted research on M&A and high-performance finance.

The authors would like to thank Thomas J. Herd, Rohit Khanna, Esther See and Ashish Poddar for their contributions to this article.