Since early 2021 mergers & acquisition (M&A) deals have been on the rise. 2021 saw $5.1 trillion in M&A transactions. Though the price of these deals is also on the rise, the volume and size of the deals are expected to continue to increase in 2022. However, organizations continue to struggle with ensuring they reap the value of these pricey endeavors.
Most M&A deals tend to fall apart in the integration phase. Whether it’s underestimating the costs of integrations, setting unrealistic timelines, struggles with merging cultures, or underestimating the integration process--approximately 70 percent of integrations fail.
Role of Process for M&A
Based on research on M&A integrations, approximately a quarter of organizations tap into their process teams for support during post-acquisition integration. Overall, process teams help their organizations through an array of capabilities.
Process’s Role in M&A Integration
When it comes to integration, process teams’ efforts span the first four pieces of the process life cycle.
- Identify and organize—identify which processes exist, including critical processes associated with the deal.
- Design and document—documenting processes, creating standardization, and mapping the future state.
- Monitor and control—setting process measures and determining any changes that need to be made to the process.
- Improve and integrate—identify improvement opportunities and the adoption of systems or technologies.
Though not explicitly stated, process teams are also likely to support the final phase manage and support—the long-term activities of maintaining and improving the processes over time. This involves cycling processes back through the design and document, monitor and control, and improve and integrate phases as deemed necessary.
Process Teams in Action
While process teams can play a strong supporting role in the organization’s M&A integration, there are several variations that range from pre-established work to post integration alignment.
Sometimes the pre-merger process efforts help expedite post-acquisition integration. For example, in 2020, Pratt & Whitney became part of Raytheon Technologies as part of the Raytheon/United Technologies merger. The Pratt & Whitney team had previously developed a process inventory. This inventory was a key enabler for achieving alignment during this merger because it created a common language, was used for standardization and gap identification in processes and measures.
More often than not, organizations do not include their process teams in the actual post-acquisition integration. As a result, organizations find themselves scrambling to realign processes post-integration due to issues associated with misaligned measures, conflicting systems, and large-scale process variations.
AstraZeneca, grew through M&A, resulting in wide-spread variance on how work was getting accomplished. In other words, there were multiple procedural documents for the same process across the organization, which was exacerbated by significant expansion in product development and changing regulations. In response, AstraZeneca’s process team launched a simplification and standardization initiative to develop standard operating procedures across the 27 interconnected processes used in clinical trials.
Dentsu Aegis Network’s growth through M&A, not only provided a lot of opportunities, but it also left the organization with multiple processes and a lack of consistency across the organization. To standardize its processes and drive greater transparency in its work with customers, Dentsu set out on a journey to map and document its processes, re-engineer them, and support their implementation after change.
For more information on this topic check out: Process Supporting Merger and Acquisition and Managing Mergers and Acquisitions Survey Report.
Next time we will discuss process teams and their role in risk mitigation.
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