1 + 1 = 3: Successfully Navigating Post-Merger Integrations

lthough capital markets have cooled considerably this year following record-setting M&A activity in 2021, many experts expect the pace of mergers and acquisitions to pick up again as market conditions improve. A thoughtful and well-executed M&A strategy can be especially effective for growth-stage companies looking to grow revenues, expand geographically, or complement your product suite with tuck-in acquisitions.

However, experts estimate that anywhere from 70 to 90 percent of mergers and acquisitions fail – often because of challenges related to integrating the companies. With so many deals failing to deliver value, it can be intimidating to venture into the world of M&A. Dean Dorman, Partner, Portfolio Operations at TT Capital Partners, has led or helped guide dozens of acquisitions during his 30-year career, including eight of them at TTCP. 

In this blog post, Dean shares his insights on how growth-stage companies can alleviate the risks associated with M&A activity by leveraging a proven playbook to successfully manage post-merger integrations.

Why do so many acquisitions fail?

Dean believes that the lion’s share of acquisitions fail due to bad moves made very early in the M&A planning cycle and generally at the very top of the leadership structure. He cites three common examples:

• Weak integration leaders. Good integration leaders are a rare find. On one hand, they must be gritty enough to work and resolve complex and sensitive issues on a daily basis. This is the “roll-up-your-sleeves operator” skill set. Yet, they also need to be senior and savvy enough to earn the trust and respect of both integration teams, so they can guide them effectively.
• CEOs/COOs trying to lead the integration themselves. Top-level executives are too busy running the business and often lack the latest or most complete set of integration tools and processes. Thus, they tend to cut corners. And because they typically don’t have extensive experience leading integrations, they may fail to anticipate common problems.
• Poor use of advisors. CEOs and CFOs often don’t trust third-party consultants to guide integrations, and they don’t want to pay hefty fees (hundreds of thousands, if not millions, of dollars).