Five steps to improve the odds of M&A integration success

22 February 2023 3 min. read
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In today’s uncertain and complex environment, successfully closing and integrating a deal can be a major challenge for dealmakers. Nicolas Ribollet and Camille Geadah from KPMG in Bahrain provide five practical steps how M&A and post-merger integration experts can improve their odds of success.

1. Make strategic value your ‘north star’
The ultimate payoff from complex deals is often strategic value – new opportunities or new ways of doing business that build long-term value. These deals transcend traditional synergies. They are also a market signal to investors, customers, competitors, and employees – a stake in the ground that demonstrates conviction in a bold vision.

The strategic goals of the transaction, therefore, must be clearly defined, widely supported from a stakeholder perspective, and pursued methodically and relentlessly.

Nicolas Ribollet and Camille Geadah - KPMG

2. Play offensive to win during diligence
Due diligence should not be a ‘check in the box’ exercise to validate baseline assumptions. It’s your opportunity to identify even greater sources of value and explore the art of ‘what’s possible’ with target management. It’s also an opportunity to ensure that your own organization is clearly aligned around the key ‘levers of value’.

3. Get a ‘running start’ before Day 1
Complex deals demand a different approach to the ‘Day-1’ readiness – one with greater purpose, intensity, and speed. Sophisticated buyers use the ‘sign-to-close’ window to protect business momentum, find and mitigate blind spots, continue to seek even higher synergy upside, and accelerate tailored integration planning.

4. Adopt a people strategy for the times
More than ever, the value of a target lies in the capabilities, energy, and culture of its people. Tight and evolving labor markets raise the risk of losing talent – and reduce the likelihood of finding replacements quickly. To make complex deals work, you need a ‘people’ strategy fit for today’s talent realities, and a potential integration plan that focuses on preserving the success factors aligned to people, performance, and culture.

5. Think continuous value creation
Buyers define synergy targets at the outset, but they shouldn’t stop there. Be alert to new opportunities that arise and prepare to flex as markets, leadership, and strategies evolve. While it is critical to have a strong focus on risks and potential compliance related threats, value creation for the future is a strategic growth opportunity, which must not be sidelined.

Deals outlook

The advice of Ribollet and Geadah could not have come in a more timely manner. According to recent research from Bain & Company, the number of transactions in the Middle East will rise further this year, despite the increasingly complex and volatile backdrop for dealmaking.

Echoing the forecast by Bain & Company, Ribollet said: “Within our practice at KPMG, we are witnessing an increase in the number of acquisitions of technology-based companies by non-technology players, mostly within the telecom and financial services sectors. We expect the volume of deals to continue to go up significantly in many sectors across Bahrain and the Gulf region, in line with the economic diversification plans.”