KPMG surveyed 160 U.S. and European companies to identify the organizational and implementation attributes of successful corporate M&A teams, and identified five practices that companies consider to have the greatest impact on their success. These include:
- Due diligence: "Champion" teams utilize a different set of resources - and more of them - to verify a broader set of business issues and better refine their valuation models. Champion companies spend a third more time in the due diligence process than the less successful companies.
- Monitoring post-deal results: Leading companies measure the performance of their Corporate Development managers by using post-deal results. Some 60 percent of champion companies give their business development teams responsibility to get the new business ready for Day One, twice the level of involvement reported by the least successful organizations.
- Allocating resources: Successful M&A teams understand how to find, train and commit the right people within the organization to meet deal objectives. Champions committed 50 percent more resources to rotational programs with a 24-month time commitment, nearly twice that of their less-successful counterparts.
- Assembling an effective Project Management Office (PMO): Leading teams find the optimal leaders to oversee an Integration PMO, and effectively manage cross-functional activities. Nearly 20 percent of the less successful deal- makers say they don't have an integration budget developed during due diligence. By contrast, 90 percent of the top acquisitive companies start planning integration during their due diligence phase.
- Stabilizing the business: Leading M&A teams take the required steps to quickly stabilize the new organization as soon as the deal is done. Leading companies seem to be able to stabilize the new business 33 percent faster than less successful companies.
"Companies are working to improve their internal M&A capabilities because the tougher financing conditions leave a smaller margin for error in any deal, and a softening economy is making it even more difficult to find revenue synergies in a combined organization," said Gottlieb.
The KPMG research, Doing Deals in Tough Times, also examined how M&A champions organized their deal-making units to help ensure that they execute these leading practices on every transaction. The study discusses a variety of organizational characteristics, including team size, reporting structure, skill composition, recruiting practices, tools and training, and compensation -- among others.
"There are many changes an organization can make to achieve better M&A results while minimizing disruption to their existing operating model," say Gottlieb. "The five attributes of successful deals are relatively simple to understand and implement, so management commitment to evaluating and changing M&A processes can greatly increase the odds of delivering a successful deal."
