This is one of two articles on achieving postmerger synergies. For practical tools for capturing synergies, see the companion article, “Capturing Value from Synergy in PMI: Four Essential Steps.”
In M&A, the seeds of synergy success—or failure—are planted earlier than many leaders realize. Integration planning should begin not after the deal is signed, but during the due diligence phase. Too often, acquirers treat due diligence as a numbers exercise detached from the realities of integration. As a result, they end up with a set of theoretical synergy plans that prove difficult to execute once the deal closes.
By contrast, companies that think about integration during diligence—considering how operating models will fit together, what choices will shape value capture, and which leaders will be accountable—position themselves to turn synergy projections into real outcomes.
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From there, the challenge is to push the organization to capture more than just the base case. The most effective acquirers use the integration process as a catalyst for realizing the deal’s full potential. They challenge teams to push beyond conservative assumptions, setting stretch targets that create a buffer against uncertainty, uncover new sources of value, and raise performance across the combined enterprise. Importantly, they do this as rigorously for revenue synergies as for cost synergies, whenever there is a top-line opportunity supported by a value thesis.
Our work with leading M&A practitioners shows that these two early actions—tightly linking due diligence with integration planning and setting ambitious, evidence-based stretch targets upfront—are especially critical for successful synergy realization. Together, they enable companies not only to deliver on what was promised but also to unlock the full potential of the merger.
Start Integration Planning During the Due Diligence Phase
In many deals, there is an unintended divide between the due diligence team and the integration planning team. Under intense time pressure, the due diligence team must quickly generate synergy estimates, often without a clear picture of how integration will unfold or the obstacles to realizing those synergies. Estimates tend to be broad-brush—cost savings exceeding 20% based on consolidation or industry benchmarks, for example, or revenue gains of more than 10% based on high-level assumptions about customer segment shares—with no accounting for the combined company’s future operating model or the integration approach.
Confident management teams, focusing on other aspects of the deal, may accept these numbers without carefully scrutinizing the trajectory of the core business or the feasibility of the stated synergies. By the time integration begins, business unit heads—who will be responsible for delivering on the synergy case—often have had no input and may question its validity.
Leading acquirers ensure a seamless handoff between the due diligence and integration planning teams. These acquirers develop a view of the integration approach and the combined entity’s target operating model before the deal is announced. Such early alignment allows the due diligence team to refine the synergy potential and phasing to reflect not only industry overlaps and deal structure but also integration realities and operating model constraints. The outcome is a more informed purchase price and avoidance of unwelcome surprises.
Linking due diligence and integration planning also fosters greater ownership and accountability among line managers and allows for more ambitious stretch targets. Involving business unit heads in the due diligence stage helps ground synergy estimates in operational reality—although it is important not to turn due diligence into a formal budget process. Moreover, embedding a due diligence team member into the integration management office’s baseline and synergies platform team helps ensure continuity and accountability.
It is equally critical to articulate the high-level drivers behind the savings. This clarity helps teams understand the operating model choices underpinning the synergies and the potential impact on value capture if those choices change during integration.
A multibillion-dollar European industrial company’s acquisition of a peer’s business unit with overlapping products offers a case in point. The acquirer crafted a detailed synergy plan during due diligence. It included heads of sales and HR and other functional managers on the due diligence team, bringing subject matter expertise to help assess synergies, function by function. These leaders, all of whom would later be on the integration team, identified key synergy levers and helped set preliminary, function-level targets by year and location, well before the deal closed.
Although more people than usual were involved in due diligence, the payoff was substantial: functional managers understood and owned the targets from the outset. By the time the deal was signed, the company was already well positioned to jump-start the integration process with aggressive, yet realistic, synergy goals—even as the targets continued to be refined after signing.
Establish Stretch Targets to Maximize Value Creation
Many leaders underestimate the importance of setting stretch targets for synergies. Every deal faces the risk of value leakage—the gap between planned initiatives and those ultimately realized—because of the uncertainty and data limitations inherent in due diligence. Meeting publicly stated synergy guidance is essential, but if internal plans only barely match externally communicated targets, there will be little room for error. By setting more ambitious internal targets, acquirers create a buffer that helps ensure that market commitments are met, at a minimum.
Stretch targets also serve a more dynamic purpose: they push leaders to uncover opportunities that may not have been identified during a compressed due diligence sprint lasting only a few weeks. This mindset encourages integration teams to think beyond immediate execution and explore full-potential levers that can unlock additional savings or revenue to reinvest in the business.
By thoughtfully considering stretch targets, leaders can promote a focus on the future—encouraging integration teams to be ambitious and creative. In effect, they force the teams to stretch their thinking during the planning phase to explore what can be achieved later on, during integration and beyond.
The upside is significant. An analysis of a sample of BCG-supported mergers with stretch targets shows that these acquirers achieved, on average, cost synergies that were 10% higher than those anticipated in the internal due diligence business case and 18% higher than publicly announced guidance, even after accounting for value leakage.
The process starts by using due diligence numbers as a foundation, but focusing on the high end of assumptions—and recognizing that this upper limit will vary across functions. Leaders should de-average targets to focus ambition where incremental value capture is most likely. For instance, there may be substantial upside from yield improvements in manufacturing but limited further gains from additional staff reductions in already lean support function teams.
To set credible targets, leading acquirers use triangulation: combining multiple data sources to refine estimates and gauge what constitutes a reasonable stretch. These include external benchmarks, industry peer data, prior integration results, functional expert insights, proprietary databases, and scale curves. (See the exhibit.) BCG’s proprietary synergy database, for example, provides synergy benchmarks by deal size and industry, with cost savings broken down by line item. Triangulation narrows the range of plausible outcomes and allows targets to become increasingly granular as additional data becomes available.
Ownership of this stretch ambition is equally critical. Stretch targets must be embraced by the merged company’s leadership team. Without executive buy-in and understanding of how they were derived, targets risk being dismissed as unrealistic, reducing the likelihood of success.
In announcing their merger, two major chemicals players communicated cost and revenue synergy targets to the market. While external analysts questioned the achievability of the synergy guidance, senior leaders internally set their sights higher. The steering committee identified specific areas—such as procurement and supply chain—where they believed greater upside was possible and where they set aggressive stretch targets, supported by credible assumptions.
This challenge spurred integration teams to explore new synergy initiatives beyond the original due diligence business case during an extended pre-close integration planning period. Some initial due diligence hypotheses proved inaccurate but were replaced by fresh opportunities uncovered during the detailed planning. Ultimately, the identified cost savings initiatives exceeded the original plan by 65% and revenue synergy initiatives surpassed it by 30%. Moreover, the company achieved the externally committed cost savings two years ahead of schedule.
True synergy success depends on connecting due diligence with integration realities and embracing stretch ambitions that push teams to go further. By treating diligence as the starting point of synergy planning and using stretch targets as a catalyst for full-potential change, leaders can safeguard delivery against uncertainty and open the door to greater value creation. Executives who adopt these disciplines will not only meet the expectations set for the deal but also position their organizations to capture transformative benefits beyond the original plan.
