Post-Merger Integration

New Roland Berger study: Professional synergy management is crucial for successful post-merger integration (PMI)

• Global volume for mergers & acquisitions (M&A) in 2011 is expected to climb to EUR 1.6 trillion
• The value of unsuccessful transactions is estimated to amount to about EUR 388 billion
• 80% of these transactions fail due to a lack of professional integration and synergy management
• Incorporating a PMI manager right from the start of an M&A process is crucial to success, along with correctly choosing and organizing the synergy actions

Munich, November 2011: After a serious cooldown in 2008 and 2009, the global M&A market is recovering in 2011, and will likely hit a transaction volume of about EUR 1.6 trillion by the end of the year. At the same time, however, the value of those transactions that fail is also climbing, up to estimated EUR 388 billion. In 80% of cases, the reason for the failure is a lack of professional integration and synergy management during the PMI process. These are the findings of a study conducted by Roland Berger Strategy Consultants entitled "Synergy management for successful post-merger integration". The study was based on a survey of and interviews with more than 130 companies from 15 different industries.

The worldwide market for M&A transactions is growing again, and it is expected to reach a total volume of about EUR 1.6 trillion by the end of the year. "Despite this positive development, we estimate that approx. EUR 388 billion of those transactions will fail. After a merger or acquisition, many companies don't manage to tap the hoped-for synergies to the planned extent," says Thomas Rinn, Partner at Roland Berger.

The critical role of the PMI manager

Of the companies surveyed, 80% said their transactions failed because they had no professional integration and synergy management following the merger. "For an M&A transaction to succeed, companies have to implement the right synergy levers within a defined time frame," explains Oliver Knapp, Partner at Roland Berger. "For example, purchasing volumes should be optimally bundled, production capacity better utilized and new product development efforts combined."

Identifying and coordinating such synergy opportunities after a merger is the job of a PMI manager. That's why 70% of the survey participants think it is important for a PMI manager to be named even before the negotiation phase of an M&A process starts. However, only 40% of the companies surveyed actually do this in practice. Rinn explains, "The function of a PMI manager is very complex and time-consuming. This means that whoever takes on this role in the newly formed company has to do it full-time if they want to be really successful."

Over 70% of the companies in the study share this view, but only 37% actually make it happen. What's more, 95% feel that the PMI manager should come from the top management echelons of the merging companies. "This shows very clearly the kind of responsibility accorded the function of PMI manager. He or she is ultimately accountable for the success or failure of a merger or acquisition," summarizes Knapp.

Choosing the right synergy actions is key

One factor that is critical for successful synergy management is selecting suitable actions along the company's entire value chain. Four critieria play a key role in that selection: an action's effect, speed and sustainability, plus how well it is embedded in the corporate culture. "When there are major changes in the company, employees need to be informed and involved as quickly as possible," says Rinn. "If an action doesn't fit with the corporate culture and isn't accepted by the employees, it's much hard to implement." Accordingly, 84% of the companies surveyed rated timely and regular internal communication throughout an M&A process as very important.

But just as important is coordinating the content of all actions in a timely fashion. In doing so, the company has to take into account the effects that actions have on each other, so that it can prevent possible negative consequences. What's more, the schedule for implementing the synergy actions has to be realistic, so that the timeline doesn't need to be changed after the fact.

The study can be ordered at:

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Roland Berger Strategy Consultants, founded in 1967, is one of the world's leading strategy consultancies. With over 2,000 employees working in 43 offices in 31 countries worldwide, we have successful operations in all major international markets. The strategy consultancy is an independent partnership exclusively owned by more than 200 Partners. Roland Berger Strategy Consultants has 70 employees in Switzerland.

For further information, please contact:

Simone Valérie Jacober
Public Relations
Roland Berger Strategy Consultants Switzerland
Tel.: +41 43 336-8691

Roland Berger Strategy Consultants Switzerland