Strategies for Successful Mergers and Acquisitions: Three Tips to Ensure Deal Success

The world of mergers and acquisitions (M&A) is seeing a resurgence in 2024, with deal-making picking up in New Zealand. Various sectors like technology, healthcare, energy, and finance are leading the charge in this increased activity. It’s not just number crunching and strategy that determine the success of these deals; the human side plays a critical role too. In fact, the historical failure rate of such transactions is quite high, ranging from 70-90%.

As someone who has navigated the complexities of M&A as a CEO, I understand the importance of creating strong, aligned leadership. Research shows that many deals fall short of achieving their intended value, making it essential to have the right leadership in place both before and after the deal closes. Ensuring that the leadership team is fully aligned and supported to lead the combined entity is key to maximizing the value derived from the transaction.

Effective communication is another crucial aspect of making M&A deals work. While stakeholders like shareholders are typically kept in the loop, employees are often overlooked. However, the success of the deal ultimately rests on their shoulders. By clearly communicating the rationale and vision behind the merger or acquisition, you can secure buy-in from your team and drive talent retention, which is vital for successful delivery.

Culture is often a determining factor in the success or failure of M&A deals. Assessing and aligning the cultures of the merging entities, identifying the desired values and behaviors, and actively promoting them within the new combined entity can help mitigate culture-related challenges. Ultimately, the CEO plays a pivotal role in shaping and championing the desired culture, as employees tend to emulate the behaviors of their leaders.

Experts emphasize the importance of focusing on people in M&A deals, as they are the ones who ultimately realize the synergies. While financial metrics and strategic planning are essential, it’s the human element that truly determines the success of a deal. By prioritizing strong leadership, effective communication, and a cohesive culture, deal-makers can increase their chances of achieving the desired outcomes in M&A transactions.