Maximising value after the acquisition
When a corporation evaluates a potential M&A target, its main focus traditionally tends to be pre-deal and numbers-related. This helps ensure the corporation makes good choices and pays the right price for the target. Yet studies have reported that more than 60% of transactions erode shareholder value. The problem often arises from poorly conceived and executed postdeal integration, a major concern of executives as reported in the 2005 PwC Deal Survey.
The signing of a deal is not the end. It is really the beginning of the real work to realise value from the acquisition. In fact, to maximise value, preparation for integration should commence during the pre-acquisition phase. There is too often a disconnect between the business development team which evaluated and sealed the deal and the business managers who subsequently inherit the acquired entities. These managers are usually not involved early in the process and may not have the necessary experience or capacity to manage the integration.