M&A Principles

A majority of organisations fail to achieve their merger objectives. This is due to a number of factors unforeseen by decision makers including mistimed synergy capitalisation, an inappropriate acquisition strategy and paying too high a premium.

There are many factors that affect the success of a merger or acquisition. While the strategy can look great on paper, details may be overlooked, budgets can be underestimated, members of the board may not be in agreement or unforeseen issues may arise to derail the process.
Moregate concentrates on six key measures - planning, synergies, due diligence, organisational structure, culture and communication to achieve a smooth integration process.
The integration programme will ensure these key measures are addressed. Each workstream within the integration programme will be based on these key principles.


Key Principles

  1. The Strategic Challenge: The first step is to develop a relevant strategic direction for the combined entity. The key challenge is to ensure that the entire organisation is aligned behind it to facilitate early action and robust planning. Board leadership is mandatory. Based on the strategic direction the organisation must establish clear project goals and milestones and incorporate them into a monitoring framework.
  2.  Focus the Integration: Successful post merger plans focus on soft and hard keys at the same time. A KPMG study suggest that a holistic approach increases the chances of success by up to 60%.
  3. The Synergy Challenge: Overestimating merger synergies can lead to unattainable expectations. Organisations overpay because they are over-optimistic about the anticipated cost savings or growth targets, a common behavioural flaw in strategic planning.
Inaccurate, non-systematic capturing of data can also lead to mismatches. 
  4. The Integration Manager: The integration manager is a pivotal figure and critical to success. Whilst certain objectives are characteristic, key is to work closely with the senior management team and the board to build a platform for decision making.
  5. The Challenge to Change: Expectations for change are high immediately after the merger. Managing all stakeholders is a key to success. Key business strengths of the new entity need to be identified and rigorously implemented. It becomes critical to discriminate between new, accepted behaviours and old habits and unacceptable behaviours.



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