Mergers and acquisitions are vital to the growth of many businesses, yet roughly half of all M&As fail to create shareholder value. Why do so many deals—especially those that promise to offer substantial cost and revenue synergies—produce such disappointing results?
One major reason is that companies tend to treat PMI as a mechanical process that occurs after the deal is closed. In fact, it is the strategic and tactical choices made before the deal is legally completed—and often before the bid has even been made—that ultimately determine whether the integration will succeed or fail.
Also, PMIs are often treated as a one-size-fits-all process. Yet each PMI will have its own speed, style, focus, and rhythm. The PMI process must be tailored to account for those differences. As an example, a merger driven by cost synergies will require a very different strategy than one in which achieving revenue synergies is the main goal.
Despite the uniqueness of every PMI, there are 12 common rules that ensure organizations gain the value they expect from their M&A. These rules can be categorized into the three phases of every PMI.