Post-Deal Management Survey

Purchasers get the 'morning after' feeling as competitive M&A market puts pressure on them to deliver benefits post-deal

As companies pay more for their assets in a highly competitive M&A market, the room for error in delivering the anticipated benefits of a deal is diminishing. Management teams, who frequently have to pay half the anticipated synergy benefits to put together successful bids, are now being faced with increasing challenges in delivering value once they have landed the deal.

The scale of the challenge is mapped out in research conducted by Ipsos in late 2005 on behalf of KPMG Transaction Services. The research finds that on average 43% of the synergy target identified by the purchaser is now included in the purchase price. This means acquirers have to deliver half the synergies just to break even, yet two-thirds of acquirers fail to realise the full synergy target.

In closing the deal, a majority of companies are subject to a regulatory period of, on average, three months. Then again after completion, it takes a further nine months, on average, for the companies to feel they have control of the significant issues facing the company post deal, with just over 10% stating that it took them nearly two years to get to this point.

Although a difference in organizational culture is the second biggest post deal challenge cited, 80% of companies say they were not well prepared to handle this. When asked what they would do again, respondents say they would spend more time on cultural assessment as part of their top three actions.

Technical details

A total of 101 interviews were conducted by Ipsos among corporate executives responsible for managing a deal, from a sample of global companies and 20 private equity houses. The survey focussed on their experience of significant recent deals they had transacted. Fieldwork was conducted between 30 August - 7 November 2005.