RESEARCH REPORT

In brief

In brief

  • 78% of executives believe they can no longer rely on their current M&A capabilities for digital deals.
  • One reason is that traditional M&A integration approaches can freeze innovation for up to three years.
  • An Agile approach enables incremental and continuous innovation to proceed during the M&A integration.
  • Examples in Utilities and Banking show how Agile M&A integration drives innovation to improve customer experiences and retention.


Avoiding the innovation deep freeze

Historically, the focus of many M&A deals has been on growing market share and cost advantages. For these types of deals, a traditional approach to M&A integration makes sense. Leaders start by planning and determining the integration milestones they’ll need to reach. They then move through the integration process by following a sequential set of activities. The steps are stage-gated and predetermined.

Many M&A deals today, however, are about more than gaining scale or cost savings. They’re equally about securing new capabilities and innovations to create new customer experiences, drive new behaviors and grow revenues. For such deals, a traditional approach may not be the best choice. Why? Because it tends to push innovation to the bottom of the priority list. Considering that most large transactions can take 12-36 months to complete, a business risks having no—or severely reduced—innovation for an extended period while competitors surge ahead.

Ironically, companies looking to acquire or merge with another to gain an innovation edge might inadvertently be killing it.

M&A: Modern & Agile

An Agile M&A integration approach enables incremental and continuous innovation to proceed during the integration. It’s flexible and highly iterative. Activities are tackled in short sprints, each focused on immediate priorities and requirements. It’s also highly collaborative. Fast decision making is one of its most important characteristics.

Agile approaches in M&A are well suited to projects involving the integration of technical solutions or activities focused on building revenue synergies with new customer-facing processes, systems and algorithms. They should augment rather than replace traditional approaches that are still best for instilling discipline and consistency in the integration of certain functional areas such as finance or compliance.

>50%

of acquisitions were related to gaining new, digital capabilities for those companies most active in M&A.

78%

of executives believe they can no longer rely on their current M&A capabilities for digital deals.

A catalyst for lasting change

A hybrid M&A integration approach, which draws on the best features of Agile, changes the integration game. It allows companies to focus on efficiency gains and new business opportunities. It helps companies manage risk—both reputational and executional—by giving teams the tools to focus on different aspects of the deal with different methods. Thanks to the highly collaborative nature of Agile, the new approach also ensures a better cultural fit between different entities. Perhaps most importantly, it allows the merged organization to sustain—if not accelerate—its innovation agenda and maintain market relevance.

Utilities: (Em)powering the people

In disparate industries – from Banking to Utilities – companies exhibit how Agile M&A integration approaches can drive innovations resulting in improved customer experiences and retention during the integration phase of the deal. Two European utilities recently used Agile approaches to carry out critical post-M&A integration activities aimed at customer retention. The approach ensured innovation remained front-and-center during the integration and reduced risks by identifying issues early on. People felt heard and valued in the new, to-be organization. And the merged entities’ churn rates beat expectations. The company is already planning to use Agile approaches again during future M&A integrations.

Pressing the Agile accelerator

Companies can take three broad actions to maintain their innovation edge during—and after—M&A integration.

1. Determine where Agile is appropriate

Certain aspects of integration need traditional approaches. Identify where an Agile integration approach makes sense assessing the ultimate business impact of using Agile and workforce readiness.

2. Hone Agile capabilities over time

Introduce new practices gradually. Train the uninitiated and expose them to Agile teams. As the integration progresses, add new Agile work sets to maximize impact and keep innovation moving forward.

3. Embed Agile in the organization’s culture

Agile practices must be directed from the top—from leaders who exhibit whole-brain leadership characteristics. Leaders must ensure that governance, training, metrics and accountabilities are Agile.

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Felix Hessel

Managing Director – Accenture Strategy, Mergers & Acquisitions


Rajat Maaker

Managing Director – Accenture Strategy, Mergers & Acquisitions, Europe​


Peter Sidebottom​

Managing Director – Accenture Strategy, Banking & Capital Markets


Seth Van Winkle

Managing Director – Accenture Strategy, Technology Strategy

Contributors

Nikoo Delgoshaie

Managing Director – Accenture Strategy


Ravi Krishnan Nair

Senior Manager – Banking

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