Results of PwC’s 2017 M&A integration survey
If you want a deal to transform your business, due diligence is too late in the process to begin asking how many people will actually work together. Many companies now address that question during deal screening. As illustrated in the figure to the right, the percentage of survey respondents that brought their integration team into the M&A process during deal screening rose to 32% in 2016 from 21% in 2013. The number of respondents that waited until due diligence dropped by more than half.
Since our surveys began, in 1997, companies have been launching the integration team into action earlier and earlier in the deal process, as many aspects of integration evolve into more of a science than art. With the rise in transformational deals, it is even more critical to start the integration process earlier given the increased risks and business impact.
As we found in the 2013 survey, companies tend to lack commitment to integration completion over the long term, and have difficulty completing integration in critical areas. This year's survey continues to confirm this lack of commitment despite earlier involvement in the deal process and better alignment in integration skills. It also highlights the most difficult areas companies are having with integration, along with their respective results for integration completion.
People integration is always a top challenge, and can be particularly difficult in a transformational deal, which may involve different business models, go-to-market approaches, and capabilities. Our survey findings show the importance in gaining access to management and technical talent as a deal objective has more than doubled (from 15% in 2013 to 33% in 2016), yet there has been a 20% decline in completely achieving this goal (from 36% in 2013 to 29% in 2016).
Often, the difficulty in integrating people is due to lack of a cohesive, choreographed plan for the workforce transition and insufficient involvement by human resources staff in deal planning and process. Successful integration involves detailed planning and execution when assessing leaders, retaining the right people, designing the organization, aligning cultures, and communicating effectively.
US and Global M&A Integration Leader, PwC US
Deals Research and Insights Leader, PwC US