M&A integration in the age of transformation

March 14, 2017


By Gregg Nahass, Partner, US and Global Leader, M&A Integration, PwC’s Deals Practice

As PwC’s M&A Integration Survey celebrates its 20th anniversary, it’s remarkable how well the study’s lessons have held up over the years. The basic recipe for delivering deal value – planning the integration early, executing it quickly, and committing to it for the long haul – has proved to be reliable. Yet the deal landscape has changed, and our latest findings reflect a new reality.

We survey Fortune 1000 executives across a broad range of industries every three years, to monitor integration trends and track integration performance among public companies. The 2017 survey report shows a continuing trend: Companies are doing more and more transformational deals, using M&A to expand into new markets, products, and channels, and to gain access to new managerial and technical talent. More than half—54%—of this year’s survey respondents described the largest transaction they completed in the last three years as transformational, up from 44% in 2013 and just 29% in 2010.

Integrating a business with capabilities outside the acquirer’s core is clearly harder than combining like with like. As our survey demonstrates, many companies struggle to meet their transactions’ go-to-market goals: growing market share; accessing new markets; accessing new brands, technologies, or products; and accessing new distribution channels.

Go-to-market objectives have gained in importance over the last few years. For example, 78% of 2016 respondents said growing market share was a very important deal goal, compared with 62% in 2013. Yet far fewer respondents are reaching those goals. Just 15% reported complete success in achieving growth in market share, down from 45% three years ago.

Given the rise in transformational deals, it’s not shocking that go-to-market objectives pose the biggest challenges. Often, the whole point of these transactions is to bring customers entirely new products or services – or to sell to an entirely different type of customer. That’s tougher than simply doing more of what you’re already doing.

Transformational deals also make people integration more difficult, because the acquirer may be assimilating a different organizational structure with different kinds of employees. As companies reach into unknown territory for growth, strategic success requires leadership to coordinate deal integration across functions and geographies, taking a direct role in – and accountability for – its implementation.

M&A success today looks different from the way it looked when PwC’s M&A Integration survey first launched 20 years ago. Companies expect their deals not just to save them money or to boost their competitiveness, but to transform them.

Read our 2017 M&A Integration Survey Report.  It explores the evolving challenges for dealmakers and offers our insights to assist you in making decisions when choreographing your company’s next big performance.


Contacts

Bob Saada

US Deals Leader Tel: +1 (646) 471-7219 Email: bob.d.saada@pwc.com

Neil Dhar

Tel: +1 (646) 471-3700 Email: neil.dhar@pwc.com