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How to win the M&A integration marathon in financial services: Focus on your people

Most financial industry M&A deals underperform.

There’s a big difference between negotiating an attractive deal and making it work. In between announcing goals and achieving them, many firms struggle with M&A integration, and this is particularly true in financial services (FS).

Responding to PwC’s 2020 M&A Integration Survey, surprisingly few companies described their recent transactions as significant successes when viewed strategically, operationally and financially. In FS, success was even rarer: Only about one in 10 were that positive.

Expectations are part of the issue. When deal prices are high, investors expect more value, making it harder to see a desired payoff.

But the survey also indicates that many firms haven’t mastered key elements of successful integrations. This is a particular problem for FS firms, especially as they try to drive growth through deals that acquire people and technology.

Deal success

Firms find it easier to cut than grow

Many companies turn to deals to grow market share and revenue, and here’s where FS firms really fall short: 79% called market share growth either “very important” or “the most important goal” of a merger or acquisition, but only 8% said they completely achieved this goal after the close. When it comes to revenue synergies, not a single industry respondent reported “very favorable” results. Forty-five percent couldn’t even call their results “favorable.”

Mergers and revenue synergies

Why they underperform

Financial industry deals often miss the mark for reasons that are avoidable.

  • Financial services firms depend so much on talent, especially in the front office and on technology teams. When a firm doesn’t retain key employees — a big risk after a deal closes — it may lose the very thing that made the acquisition target attractive. And firms often don’t understand which employees matter most, let alone what their motivations are.
  • The industry is highly regulated by multiple authorities, often within and across multiple jurisdictions. Deal approvals can become marathons, creating extended periods of uncertainty, complicating integration planning and execution. The longer timeline may increase the odds that key employees will leave, especially if the uncertainty isn’t addressed.
  • Financial services firms often put in place strong disciplines around financial, technology and operational integration, but they rarely implement programs to measure and manage employee engagement with the strategic vision for the transaction. From simple voice-of-the-employee surveys to dashboards that illustrate how teams use collaborative tools, there are steps firms can take to catch and address concerns while they’re still easily manageable.

‘People are our most important asset.’ Here’s what you can do to keep them.

After the plaques are put away, many FS employees start dusting off their resumes. A paltry 7% of the firms in our survey reported “significant success” in post-M&A employee retention, a number companies are clearly unhappy with.  Indeed, for 62%, access to talent was either a very important deal goal or the most important goal of an acquisition.

In the front office in particular, key employees typically share deep bonds with customers, and when  these employees leave they often take their customers with them. We’ve identified some specific areas where financial institutions underperform during M&A integration, and they’re all related to people. 

These are some of the questions your key people may be asking, and you’ll want to be prepared when they do.

What’s our direction?

If you’re not sure of your new company’s future, you may start looking for other options. But only 10% of financial services respondents report that their employees understand the company’s post-deal direction. That may be because only 31% of respondents had a communications strategy ready at deal signing. When leaders aren’t in sync on their messaging, employee uncertainty is likely to grow.

What’s my role?

Long, drawn out talent selection and mapping breeds uncertainty. The result is attrition that even retention bonuses can’t stop. It’s an especially big problem for top producers whose portfolios may overlap. Yet only 10% of financial services respondents had a plan in place for talent assessment at deal signing.

Where’s the tech?

Top producers want technology that makes it easier to innovate and focus on customers. Yet only 34% of financial institutions assign full-time resources to post-deal tech integration, and many decisions start with “which tool is cheaper?” rather than “which tool is better?” (Nearly twice as many firms assign full-time resources to financial integration. Employees notice.)

Do I fit in?

When cultures clash, top producers — who always have options — may walk away. This is especially common when large companies acquire FinTech startups. With the convergence between the worlds of finance and technology intensifying, many firms that haven’t made efforts to build a digital, tech-enabled culture struggle. But this can even be true in a merger of equals, where two competing brands need to put aside their differences.

Is management paying attention?

Most deals in financial services abound in financial and operational metrics, but few apply those metrics to people. Only 31% had defined, key performance indicators (KPIs) for employee engagement post-deal.

Winning the marathon: Seven ways to drive change for M&A success

The deal isn’t done once the paperwork is signed; it’s just the start of the integration marathon that involves more than a sprint to the deal’s closing. We’ve found that successful M&A integrations have seven key components to drive change. Yet 95% of FS firms told us their integration programs contained just three or fewer of these key drivers.

Want to see better results from your integration program? When you acquire or merge with another FS firm, have a plan ready at deal signing to address all seven. With that plan, and with consistent execution throughout the marathon, you can feel confident that key people will be likely to stay on board, engaged and productive, throughout the integration process and beyond.

Mergers and change management


You can’t just hold a meeting and expect cultures to integrate — especially now with the pandemic making most in-person meetings impossible. Your post-transaction integration plan should define the behaviors you want to see, deploy role models and create incentives and metrics to help you steer the migration toward the culture you’re building.


Publishing a new organizational chart is just a process step. You need to explain how the new structure fits within the enterprise and business operating models. Employees also need clear guidelines on what is expected of them, what they are accountable for, what decisions they own and what decision-making they’ll share.


Your communications must be early, often and ongoing. Your communications strategy will have to build support for a new business proposition, new leadership and a new organization throughout the integration marathon. The pandemic arguably makes this more complicated, as many employees at each firm may already be grappling with anxieties unrelated to work, but that makes setting the right tone is even more important.


Top leadership in both companies must align on deal rationale and messaging. You’ll also need to move swiftly to select the right leaders for the right positions, minimizing conflicts and providing clarity and stability.

Policies and procedures

An integration offers an opportunity to improve core work processes and practices to enhance performance. Identify policies and procedures to align, replace or improve, and roll out the changes with robust communications and training. Firms have already adapted processes for virtual work. Now, as you think about integrating two organizations, you’ll want to reimagine work based on what really matters rather than “how we’ve always done it.”

Employee onboarding

A new company requires new or realigned ways of working. Design an onboarding program that covers everything from culture and values to policies and procedures, and which will increase adoption and business continuity. Add digital upskilling programs as needed. Many firms have been rethinking what onboarding should look like in a virtual work environment. This could be a fresh opportunity to define the culture for new employees. It’s a new experience for everyone.


Well-thought-out incentive programs support value-driving activities and results across the entire combined organization. The programs should not just target top performers and strategically critical talent. They should also include financial and non-financial retention and recognition incentives for employees who are critical for the integration itself and for knowledge transfer.

Spotlight on culture

When FS firms integrate a new acquisition, they often focus on reducing cost. It’s easy to measure. And when they think about revenue targets, they often turn to retention incentives to keep key producers. That’s easy to measure too. But will it work?

Culture can have a huge effect on a deal’s chance of success, and it often matters most to the people you’ll want to retain. Consider an FS firm targeting a FinTech company to acquire intellectual property and key technical talent. What motivates the FinTech developers? Is it money? Do they value relative autonomy? A spirit of innovation and collaboration? Do they want to experiment with cutting-edge technology without having to fill out forms and attend committee meetings?

There are explicit and implicit behavioral norms in any organization, and key contributors at your firm and at your target are paying attention. If your top performers don’t feel that their values are being respected, they may walk out the door and take much of the value of your deal with them.

Our survey may indicate that FS firms often fail to deliver on key goals, but it also points the way to a solution. With these seven drivers in place, a combined company can often increase the odds of success by identifying and addressing the hot spots that are likely to emerge in an integration. Frequently, you can take concrete actions to retain key people and keep them more engaged and eager to contribute, from banking and insurance companies to asset and wealth management firms. That can help put you on a path to be more cost efficient while also achieving significant, ongoing revenue growth.

Contact us

Greg McGahan

Financial Services Deals Leader, PwC US

Joshua Carter

Partner, US Deals, PwC US

David Baral

Managing Director, US Deals, PwC US

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