Seven Catalysts for Merger Integration Success

In fact, the chances are that one in two integrations will fail. Based on research, Accenture has identified seven catalysts that can help managers integrate an acquisition successfully, positioning their companies for financial stability now and high performance when the upturn comes.

Over the years, mergers have steadily increased in value and complexity. The risks are even higher under the present economic conditions as executives find it hard to focus on both running operations and integrating an acquired business.

And yet deriving the planned-for synergies is more vital than ever to the financial stability of many firms facing unprecedented pressures. Companies in pursuit of high performance must therefore hone their ability to realize the expected value from a merger or acquisition.

Creating value from an M&A requires a delicate balancing act between speed and customer retention. Speed is vital because the time value of money is an important determinant of net present value and return on investment.

Additionally, organizational energy dissipates quickly during a merger. On the other hand, a rushed integration can alienate customers, leading to decreased revenues and an inability to meet the projections of the original business case.

Accenture conducted research on numerous mergers and acquisitions to understand what can catalyze or inhibit the merger integration process, and was able to identify seven factors that materially affect the speed of integration and synergy capture while helping retain a customer focus. These seven merger integration catalysts are:

• Effective governance and fast decision making
• A well-defined target operating model
• Creation of the “keep list” and migration approach
• Targeting and implementing achievable quick wins
• Alignment of skills with integration activities
• Effective management of country and regional differences.
• Engaging and training employees to deal with the newly acquired customers

With multiple calls on managerial attention at the moment—the need to improve capital structure and market valuation, manage government participation and return to profitable growth—attention could be diverted from a merger integration program.

However, by using the seven catalysts, hard-pressed managers can better balance the need for speed with the imperative of customer retention, thus better positioning their organizations for profitable growth and ultimately high performance.

Andy Tinlin, a senior executive in the Accenture Strategy service line, leads the company's Mergers & Acquisitions group. With nearly 20 years' experience in consulting, Tinlin currently works with leading clients to help solve their strategic and operational problems in growth strategy, M&A and business transformation. He is based in London. Contact Andy Tinlin.

Alberto Verga is a senior manager in the Accenture Financial Services operating group in the United Kingdom, with over 10 years of financial services industry experience. He has worked with leading financial services institutions in the United Kingdom and Europe on large-scale business and systems transformations, organizational restructuring, change management and merger integration. Contact Alberto Verga.