The success or failure of an integration is often measured by
whether synergy targets are met.
These synergies play a crucial role in financing the deal,
funding business growth, and meeting shareholder
expectations.
That's why it's vital that integration leaders follow a
rigorous value capture planning process.
We have four core beliefs about value capture planning.
First, it's important to set ambitious aspirational targets
for the integration teams.
These targets should represent exceptional value creation.
Individual team targets should be set using a de-averaged
approach that considers each function's starting point and
what it needs to drive the business going forward.
Second, speed is your friend.
Take advantage of the focus and momentum that deals generate to
move quickly towards realizing value.
Companies can accelerate value-creation by developing
detailed synergy plans during the pre-closing
period, using clean teams as necessary.
Third, be bold and apply a transformational lens to
post-merger planning.
We find that organizations can unlock significant value by
using the integration process to tackle core inefficiencies and
deliver step change improvements.
Fourth, plan revenue synergies just as rigorously as cost
synergies.
Don't assume that revenue synergies will just show up
automatically in next year's business plan.
Assign specific revenue synergy targets to individual businesses
and products.
Assemble a multidisciplinary group of leaders to assess and
prioritize revenue synergy opportunities and make sure that
functions including operations, IT, and HR are prepared to
support and enable the sales team to sell the new product
set.
It is important to diligently track the implementation and
realization of value capture plans.
By building value capture commitments into business plans
and then tracking progress on those commitments, organizations
can drive accountability and get an early warning if any
initiatives go off track.
Taking these actions on value capture can help ensure a
successful integration.