Despite showing strong commitment to getting the most out of M&A deals, close to a third of companies have no formal review process in place post-deal closure, according to research by Mercer.
The findings revealed that although more than 70% of respondents have an agreed process for setting Key Performance Indicators (KPIs) before pursuing an M&A deal, nearly 30% have no formal post-deal review process and 50% have no process in place that captures lessons learned from such activity.
“Our experience is that most organizations can pull teams together to staff deal related activity," says Adam Rosenberg, Mercer’s UK Head of M&A. "However, in many cases it seems to be done in a somewhat ad hoc fashion."
Rosenberg explains that teams often comprise of employees that are required to continue to their day job as well as work on the deal, something that can lead to sub-optimal results.
This is reflected in the fact that so few companies do post-deal reviews – which is the key time to learn from real deal experience and improve for the next time.
"Coupled with a thorough deal specific plan up front, these are the two key elements to achieving a successful transaction,” noted Rosenberg.
Interestingly, the companies interviewed saw “not having appropriate metrics in place” as one of the key challenges to completing post deal reviews.
This appears out of line with the fact that 80% of respondents felt having appropriate metrics in place to measure deal success contributed to successful deals.
Mercer’s research, captured in the report, "The Well-Prepared Dealmaker," also found that most employees (nearly 70%) are not specifically financially rewarded for working on transactions and where such deal-specific incentives are in place they mainly relate to key leadership positions.
"Partly, this is accepted as many employees relish the experience of working on deals as they see it as interesting, exciting and a career enhancing experience often providing exposure to senior leaders. However, some employees may be discouraged by the extra work for no immediate gain,” said Rosenberg.
Rosenberg noted that tewarding only those closing deals and failing to incentivise the whole deal team could jeopardise the successful integration of the two companies merging and even create staffing issues in the long run.
“Reward, retention, workforce structure and career opportunities should be carefully examined when working on deals," said Rosenberg.