After the Deal: 6 Key Post-Merger Areas That Determine M&A Success

The success of an acquisition hinges on the post-transaction integration phase. After the deal is closed, how well the integration processes are managed will determine whether the acquisition generates lasting value or derails into a costly misstep. Jim DeLoach from Protiviti emphasizes the criticality of addressing essential questions concerning post-merger integration for successful outcomes.

Recent shifts in due diligence practices have underscored the importance of a more focused approach in assessing acquisitions. The heightened cost of funding and the adverse impact of failed transactions on valuations necessitate a recalibration of the due diligence process. Boards and executives can expect a heightened emphasis on due diligence processes to reveal risks, affirm financial data, verify deal-specific elements, review contracts, and establish a blueprint for integrating or separating entities.

The core question during due diligence revolves around understanding the primary asset at stake in the transaction. Crucial areas to scrutinize during due diligence include assessing:

1. Supply chain resilience
2. Talent pipeline and retention
3. ESG considerations
4. Cybersecurity and data privacy
5. Compliance with laws and regulations
6. Integration effectiveness

However, the due diligence process does not conclude with the deal closure. Post-acquisition, it is pivotal to address several post-transaction considerations. These include communicating the merger or acquisition to internal and external stakeholders, executing the integration or separation plan, monitoring the plan’s progress, realizing synergies, managing cultural shifts, and providing periodic reporting to senior leaders and the board of directors.

After the deal is sealed, business leaders need to address critical questions in the six areas mentioned earlier to ensure a seamless post-acquisition phase. Post-acquisition follow-up is essential to optimizing the benefits of the transaction. For instance, focusing on supply chain resilience post-closing is crucial, whether the acquired company will interface with the acquirer’s operations or function autonomously. Assessing supplier relationships, renegotiating terms, and aligning the supply chain with industry standards, regulations, and quality control measures are key areas to focus on.

Within the supply chain context, business leaders should mull over questions such as the worst-case scenarios affecting the acquired company’s supply chain, conducting audits to identify risks, inefficiencies and areas for improvement, and evaluating inventory levels to enhance operational efficiency. These considerations, among others, are vital to navigating the post-acquisition period successfully and ensuring the transaction adds lasting value.