May 24, 2018
Building the right organization for mergers and acquisitions
Key Highlights
- The internal organization that manages a company’s M&A processes has always been a major contributor to the success of its deals. Today, as companies increasingly choose to manage their M&A processes internally, without the support of financial advisers,1 it’s all the more important to have the right team in place. This team must not only be skilled at screening acquisition targets, conducting due diligence, and integrating acquired businesses but also have the size, structure, and credibility to influence the rest of the company.
- Admittedly, most of the best practices for designing an M&A organization are well known. But, in our experience, many companies fail to put them into practice. M&A teams include members with unnecessary skills as often as they lack members with essential ones. Too little capacity is a common problem, but inflated teams frequently create issues as well. The effect on a company’s ability to capture value from its deals is notable. According to our 2015 survey, high-performing companies2 are significantly more likely than low-performing ones to report that they have the necessary skills and capacity to support essential predeal activities. Moreover, nearly two-thirds of underperforming companies lack the capabilities to integrate their acquisitions.
- What best determines the right size and capabilities for your M&A team? We’d highlight three factors: the demands of the M&A program you envision, the type of leadership role the team needs to play, and the relationship it should have with both the corporate center and with individual business units.
- About Authors: Rebecca Doherty (Partner - McKinsey), Cristina Ferrer (Expert - McKinsey) and Eileen Kelly Rinaudo (Senior expert in the New York office)