Merger Management Compendium

Most mergers are doomed from the beginning. Anyone who has researched merger success rates knows that roughly 70 percent of mergers fail. Over time, this statistic has created an entire culture and practice of merger integration focused on avoiding failure: processes, IT solutions, checklists, and workplans, all crafted to ensure that integration avoids doom by sticking to its plan.

Best-practice companies explore the full range of opportunities to achieve maximum value from every merger. They take the broad view mapped in the McKinsey framework to identify, quantify, prioritize, and capture synergies and value.

Make no mistake: mergers are challenging. But they can provide organizations with transformative possibilities. One of the biggest opportunities – integration of sales forces – is central to ensuring revenue growth and capturing the value that mergers promise but often fail to realize.

At McKinsey, we take a practical approach to understanding and tackling cultural issues. Rather than thinking about norms, rites, or employee satisfaction – terms commonly used to discuss culture – we urge executives to focus on management practices: “the way we do things around here.”

Mergers offer tremendous opportunity to create and sustain breakthrough value, especially for companies that get three mutually reinforcing attributes right: pursue transformational as well as combinational sources of value; target a new level of synergies; and understand and address the merging companies’ points of cultural incompatibility.

Despite continued uncertainty, signs point to a surge in M&A activity that will be ambitious in both scope and profile. Even M&A veterans will require new tools for analysis and integration to manage these deals for maximum benefit – new organizational efficiencies, market expansion, employee development, product innovation, and profit.

Putting new emphasis on transformation and revenue, the framework opens the aperture so companies consider the full range of opportunities to derive maximum value from any merger.