Making sure large M&A deals create value is as much about knowing who to involve—and when—as it is about knowing how to capture synergies. While keeping your deal team small ensures confidentiality, pinpointing synergies requires bringing more people on board, says a new article from McKinsey & Co.
Executives that keep their M&A teams small during the due-diligence process risk creating an integration framework based on the insights of an isolated team—without the necessary buy-in from critical stakeholders. With no one to challenge assumptions and cognitive biases, the deal planners’ synergy estimates, performance benchmarks, and cost and revenue targets can be off the mark. The company may struggle as those in charge of implementing the M&A deal try to fulfill the expectations of those who planned it.
Involving functional-group managers on a deal-specific basis can help, especially with the cost and revenue assumptions behind the valuation model. These managers can help articulate the risks of cutting too deeply or too quickly and can identify opportunities to build on an existing transformation program.
Taking a more inclusive approach to deal-making won’t eliminate tension from your company’s large M&A deals, and it won’t turn a bad acquisition into a good one. But it will help create the conditions your management team needs to turn a good deal into a great one.
See the full McKinsey & Co. article, “The artful synergist, or how to get more value from mergers and acquisitions.”