A common misperception about post-merger integration is that it can be tacked on to existing day-to-day responsibilities— that’s a recipe for unrealized value.
BCG’s framework for a successful PMI has helped clients capture 9% more value from their M&A deals.
More often than not, M&A deals destroy value; more than half of mergers and acquisitions fail or underperform. While the transactions still go through, they never unlock their full potential. That’s because the challenge of PMI—bringing together two organizations, each with its own processes, structure, culture, and management—is profoundly complex.
In short, PMI is one of the most challenging initiatives that a senior executive will ever undertake. To succeed, a PMI must achieve four fundamentally different objectives:
In the past five years, we’ve helped major multinational companies complete more than 550 mergers and acquisitions. These M&A deals generated 9% more value for our clients, on average, than the average deal, in large part because of our PMI consulting services.
We help our clients succeed by combining deep industry and business strategy knowledge with comprehensive value delivery capabilities and expertise, thus accelerating and maximizing value creation throughout the deal and the PMI process.
Because no two PMIs are alike, it's hard to develop a formula. But BCG has articulated 12 imperatives for success in a three-phase approach: setting the direction, capturing the value, and building the organization. In the first phase, defining your basic objectives is essential. In the second phase, speed is crucial. And in the final phase, continuous communication ties everything together.
PMIs are often treated as a one-size-fits-all process, yet each has its own speed, style, focus, and rhythm. The PMI strategy and process must be tailored to account for those differences. Here are a few examples of BCG’s post-merger integration consulting work with clients on their post-merger integrations:
Energy
A massive deal gave rise to an exceptionally complex PMI. BCG structured and managed the program, created full transparency of costs, developed a synergy baseline, and acted as a data broker between the two companies. The discipline paid off. The merger of giants was completed on time and on budget.
Financial Services
The merger of two large regional banks aimed to create the scale and efficiency to invest in critical capabilities. The design of the new organization was a particularly complex and sensitive challenge. BCG developed objectives and principles to guide the design and then helped define the new operating model. By deal close, the combined organization had strong leadership and was positioned to achieve synergies and build new capabilities.
Beyond these imperatives, we support clients by leveraging our proprietary toolkit to help with the hundreds of decisions they face during an integration. We employ these tools to manage the complexity and ensure that every integration captures its intended value:
Focusing on culture is important for long-term success. Start by defining the culture you aspire to in the combined identity, and then the practical steps you need to achieve it.
BCG's Niamh Dawson discusses how to successfully manage talent and culture during an integration.
A survey of dealmakers shows that technology companies can maximize the value from M&A by aligning their predeal strategy with their postdeal priorities.
Payers that take a tailored PMI approach and follow six imperatives for success will be well positioned to achieve the strategic objectives of their M&A.
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