Post-merger integration survey

New Delhi, 24 January, 2011 – Capturing sustained economic value in a merger or acquisition has proven to be one of the most significant challenges for today’s growth minded companies. Despite the best intentions, deals often fall short when the time comes to begin translating carefully developed strategy into the right mix of people, process and technology. The transaction instead of generating synergies ends in reducing enterprise value. This is the sentiment that has been echoed by over a 100 CXOs who participated in the 2010 Post Merger Integration Survey conducted by PwC India. The survey provides insight into the post merger integration experiences of Indian companies and the results indicate that only 49% respondents were able to achieve the objectives set for a particular M&A; deal.

The report based on this survey and titled “Putting the pieces together: Post-merger integration survey 2010”, lists down the six key insights that can be used by organisations to pave the road to successful post merger integration. The report also provides insight on the areas that an organisation should focus on during integration – which includes quantification of objectives, speed of integration, degree of integration, cultural issues, control issues among others. The report also gives an idea of what the best practices during the critical post merger period can be and also provides a quick checklist of what organisations in the race for acquisitions should do. This report combines experiences of key players in the Indian M&A; space with the global best practices and provides insights on how companies in the race for acquisitions can better manage the integration.

The key findings of the survey are as highlighted below:

• 63% respondents did not quantify and monitor the progress and completion of the integration objectives set at the time of acquisition.
• Cost of integration was often neglected while estimating the net value of an acquisition. Only 37% of the respondents estimated the cost of integration.
• Further, only 22% were able to correctly estimate the costs, while 78% respondents over ran their integration budget.

Involvement of the Board and M&A; team was very low in the integration process. Only 39% respondents reported the involvement of the M&A; team, and while only 26% reported the involvement of the board during the post merger integration phase.

Commenting on the survey and its key findings, Salil Agrawal, Associate Director – Head Delivering Deal Value practice, PwC India said:

“India is seeing a significant increase in its M&A; activity especially cross border M&A.; With more than half of corporate India planning acquisitions as part of their growth strategy in the next couple of  years, it has become imperative for companies to focus on post merger integration. Like their global counterparts, Indian companies have not successfully managed the post merger integration effort. This report provides insight on how companies in the race for acquisition can better manage their integration.”

Ends

Notes to the editor

About the survey

Research shows that most mergers and acquisitions fail to meet the expectation set for them. Deals often fall short when the time comes to begin translating carefully developed strategy into action and organisations are often not able to capture value out of deals. PwC conducted a survey to validate this in the Indian context and to understand the experiences of key people driving such initiatives.

The data was collected through two surveys. In one we reached out to the senior management of Indian companies that had been involved in an acquisition in the last two years. The second was a poll conducted at a CFO conclave organised by PwC.

About Delivering Deal Value (DDV) Practice

PwC has a dedicated Delivering Deal Value (DDV) practice to help organisations in their post merger integration process. We have developed a strong global methodology on the basis of our years of experience of helping companies in their integration journey. This is a global practice with dedicated teams across the world.

About PwC

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