We routinely hear horror stories about good deals being fumbled badly when handing off between due diligence and integration. Think this is a rookie mistake that your organization would never make during the big game? If so, you need some extra laps after practice.
"There is a lack of accountability for the success of the overall acquisition beyond close.”
When we are doing M&A capabilities assessments for corporate acquirers interested in building their internal M&A skills and processes, we find that the tendency to hand off badly is just as likely to happen to a high deal-count acquirer as it is to any other company. (For more information on the deal-count paradox, see Taking Your M&A Game to the Next Level).
In a survey of M&A team members and executives of a high deal-count acquirer, 67% of the M&A team said that their due diligence process failed to effectively set up and hand off to integration. Common failure factors tend to occur in several essential areas including process inefficiency and redundancy; segmentation of roles and silos; skills and capabilities; and resourcing and schedule constraints.
See if these actual client survey comments are similar to your company’s experiences:
- “We have a due diligence process and an integration process. The two don’t connect, even when occurring in parallel – it’s a ‘throw over the fence approach.’”
- “Risks were identified in diligence but they never got into the integration planning process.”
- “The business case is not known outside the strategy/diligence team.”
- “There is a lack of accountability for the success of the overall acquisition beyond close.”
- “The diligence team seems completely unaware of the workload and time requirements for integration – there’s no way to keep up with multiple deals.”
- “We do not learn from previous experiences and keep making the same mistakes over again, because this is the way it has always been.”
For best practices to help get your deal across the goal line better, see 7 Essential Strategies to Ensure a Successful Handoff from Due Diligence to Integration. This week we provide some insights on governance roles; in coming weeks we’ll address others.