Report: Integration Capabilities Key to Successful M&A Deals

by CFO Innovation Asia Staff, 06 July 2012

0 comments

Facebook

Digg

Twitter

topics:
Finance and Banking Mergers and Acquisitions

tags:
integration capabilities M&A The Boston consulting Group

Thumbnail:

Acquisitions are a key part of many companies’ strategies, yet too many deals fail to generate the gains that seemed so promising at their close. Inadequate postmerger integration is often to blame.

A new report "Enabling PMI: Building Capabilities for Effective Integration," by The Boston Consulting Group (BCG) suggests that the trouble is rarely in companies’ understanding of how to integrate their acquisitions.

“We’ve found most leaders have a good sense of what generally needs to be done to realize the synergies,” said Peter Goldsbrough, a senior partner in BCG’s London office and a coauthor of the report. “But their integration efforts can fall short because of time pressures and complexity. People get caught up in dealing with urgent matters and lose track of priorities.”

Companies can improve their execution, say the authors, by investing in the underlying capabilities that drive effective integrations.

Two Approaches to Capability Building

Building those capabilities, however, is not a simple matter. Goldsbrough and his colleagues analyzed the two main approaches.

One involves training and tool development in tandem with the integration of an actual acquisition. That approach has the merit of people learning by doing. If not done carefully, though, people can make too much of the specifics of the current integration and treat the next one too rigidly.

The other main approach, capability building as a standalone process, has the opposite tradeoffs. People get a broader sense of how integrations work, freed from the pressures of an actual deal. Yet the knowledge can remain abstract without an opportunity to bring it to life.

“We’ve found most companies opting for the tandem approach,” says Niamh Dawson, a principal in BCG’s London office and a coauthor of the report. “The standalone model works best for frequent acquirers looking to raise their game.”

Investing in integration capabilities, the authors point out, yields double benefits. Companies will manage integrations with more focus and discipline and will be more likely to achieve the gains expected from a deal. But that confidence in integrations also boosts their willingness to go after deals in the first place. Acquisitions that earlier would have seemed too difficult are now on the table and ready to help move the company forward.

MORE ARTICLES ON M&A

Orignal Author:

CFO Innovation Asia Staff

Quote Image:

Comment on this article

Your name: *

E-mail: *

The content of this field is kept private and will not be shown publicly.

Homepage:

Comment: *

Web page addresses and e-mail addresses turn into links automatically.
Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <a> <p> <span> <div> <h1> <h2> <h3> <h4> <h5> <h6> <img> <img /> <map> <area> <hr> <br> <br /> <ul> <ol> <li> <dl> <dt> <dd> <table> <tr> <td> <em> <b> <u> <i> <strong> <font> <del> <ins> <sub> <sup> <quote> <blockquote> <pre> <address> <code> <cite> <embed> <object> <strike> <caption>
Lines and paragraphs break automatically.
Use  to create page breaks.

More information about formatting options

Verification Code

This question is for testing whether you are a human visitor and to prevent automated spam submissions.

What is the fifth word in the phrase "mehun eporor upo alog opojuse"?: *

Accounting and Regulations

CFO innovation Asia Accounting and Regulation the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Accounting Regulation, IFRS, US GAAP, Tax, investor relations, corporate governance, Corporate Law, Financial Regulators, Internal Audit, Audit, Corporate Law.

Auditing, Investor Relations, Law and Compliance, Tax

Finance and Banking

CFO innovation Asia, Finance and Banking the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Corporate Finance, trade finance, treasury and risk management, capital expenditure, Banking, mergers and acquisitions

Cash and Liquidity Management, Corporate Finance, Insurance, Treasury Management

Management

CFO innovation Asia the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Management, Corporate Governance, Human Resource Management, Compensation and Benefits, Mergers and Acquisitions, Professional Development, Corporate Real Estate, Risk Management, Budgeting and Forecasting, Business Process Management, Business Process Reengineering, Outsourcing.

Budgeting and Planning, Business Expense Management, Human Capital Management, Outsourcing and Shared Services, Risk Management

Metrics

Corporates, Financial Services

Technology

CFO innovation Asia Technology the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Systems, Business Intelligence, EPR, Accounting software, CRM, Cloud Computing, Telecommunications, Business Process Outsourcing, Business Process Management Software.

Business Intelligence, Enterprise Software and Systems, Financial Systems, Security