Biggest Challenges in Mergers & Acquisitions and Key Areas

A similar survey for mergers closing found that 53% did not deliver shareholder value, so the number is very steady.

In addition, the more strategic the reason for the acquisition, the higher the failure rate. That is, the companies that acquire to achieve economies of scale are likely to be more successful and companies that acquired to vertically integrate, enter new markets, or change business models did very poorly.

Success rates are poor in Mergers & Acquisitions and current economic conditions demand that you improve them. Tools for speeding acquisition integration are coming onto the market which will drive the need for more speed. Current Mergers & Acquisitions slowdown gives you a rare opportunity to assess your processes. Acquisition integration will only become more complex as regulations tighten, and the number of cross-border transactions increases.

Why do companies not meet expectations in Mergers & Acquisitions?

• They overvalued the company during due diligence and therefore cannot gain the expected synergies because the synergies simply do not exist
• Post merger integration is not executed well enough to extract the expected synergies.

What are the Challenges in Mergers & Acquisitions?

• Information gathered during due diligence incomplete or incorrect
• Communication disconnects:
  a) Corp Dev and PMI Teams
  b) Management and stakeholders
• Deal objectives unclear
• Prioritizing PMI initiatives paralyzing
• PMI processes not well defined
• Multiple PMI teams working simultaneously – lack of coordination stalls integration process
• Inadequate PMI tracking – so corrective action not possible
• Lack of tools to help manage all this

What are Challenges in Mergers & Acquisitions

What are the Typical Affects in Mergers & Acquisitions?

• Integration process takes longer than expected
• Employees, customers and suppliers start defecting
• Straight to your competition
• Failure to realize expected synergies means shareholder expectations not met
• Stock price sinks

Why Mergers & Acquisitions Fail?

• Over-estimated Synergies
• Paid Excessive Premium
• Inadequate Planning
• Integration Failed

Why Mergers & Acquisitions Fail

There are successful acquirers, and they have two things in common. What are they?

• Speed: Successful acquirers integrate fully 70% faster than unsuccessful acquirers.
• Well-Defined Processes: Experience alone does not improve success.

Successful acquirers actively capture knowledge and apply it to the next transaction. As a result, successful acquirers gain dramatically in both revenue and profit over unsuccessful acquirers.

By sources of value we mean the synergies you’re looking for based on whether your strategy is to achieve economies of scale or enter new markets. Different strategies mean different synergies are more valuable to you. Supplier rationalization and facilities consolidation are common to all strategies, but plant redesign may be important only to a manufacturer entering a new market.

Mergers & Acquisitions Software provides the visibility into deal pipeline and better structure for selecting the right company and evaluating it.

The methodology for estimating synergies and risks, strategically aligned hand-off to post-merger management teams, and communication between Corp Dev and PMI teams. It provides priority and focus on value-add initiatives high value, low risk first.

What are the Key Areas in Mergers & Acquisitions?

• Due Diligence Management
• Deal Pipeline Management
• Synergy Realization
• Organizational Design
• Communications Planning / Execution
• Employee Transition
• Benefits and Compensation Realignment
• Sales Force Unification
• Supplier Matching
• IT Infrastructure Planning
• Master Data Management
• Facilities Planning

What are the Features in Mergers & Acquisitions Software?

The features can be classified in to Pre-Deal and Deal Management and Post-Merger Integration Mgmt.

Pre-Deal and Deal Management users are Corporate Development, Executives and Post-Merger Integration Mgmt are Post-Merger Integration Teams, Employees.

What are the Features of Pre-Deal and Deal Management?

• Research and Discovery
• Pipeline Management
• Detailed Due Diligence and Deal Selection
• Synergy Identification
• Risk Identification
• Estimate Integration costs
• Communications Planning

What are the Features of Pre-Deal and Deal Management

What are the Features of Post-Merger Integration Management?

• Organizational Restructuring
• Post Merger Management
• Synergy Realization
• Risk Mitigation
• Budget Tracking
• Communications Execution
• Reporting

What are the Features of Post-Merger Integration Management