If certain executives aren’t included, they might not believe in the deal and the synergy opportunity, and that may produce a setback in terms of value capture. We will bring you in and make sure you are consulted on things that affect your business, but we would rather not have you sit on a steering committee for three hours a week.”Īnother common question is the transition to integration planning and when you need to involve people. And we say, “No, no, you’re the sales leader, keep meeting with customers. The number of deals we see where the head of commercial wants to sit in on the steering committee is unbelievable. The other concern is how many people to involve in due diligence and to what degree. Many executives’ time gets consumed by a large deal, and that is one of the leading reasons why those large deals, on average, underperform. Jeff Rudnicki: You have this big deal that’s going to distract people, take a lot of their bandwidth and maybe cause them to lose their focus on the core business. Sean Brown: Jeff, what are some of the most common concerns clients have about synergies, especially related to big transactions? So, we set up what we call the SynergyLab, which is a group exclusively dedicated to studying and helping clients capture synergies. We realized there were simply too many assumptions following too much money-that there was just too much leakage between the concept of buying a company, turning that acquisition into expectations, turning those expectations into budgets, and ultimately turning those budgets into cash flows. This work debunked myths that, hopefully, most active dealmakers have already dispelled, such as the notion that 70 percent of all deals fail and that M&A offers poor returns relative to strategic acquisitions.Īn offshoot of that work was on synergies and ways to think about value creation. What questions were you looking to answer in this latest research on synergies?Īndy West: About ten years ago, we were looking at data showing literally trillions of dollars flowing through M&A in terms of capital allocation and cash put to work, and we wondered: Why are there so few actual insights around value creation? So, we started a piece of work called the Global 1,000, which sought to understand why the world’s largest companies do M&A and what their success rates are. Andy, Jeff, welcome.Īndy, let me start with you. His client work focuses on large mergers and acquisitions across a range of industries. Jeff Rudnicki is a partner based in our Boston office who leads our knowledge efforts on capturing value from M&A. Andy has served senior leaders in the healthcare, medical devices, high tech, and industrial sectors on all aspects of dealmaking, divestitures, and integration. Andy West is a senior partner in our Boston office. Sean Brown: Today we’re talking to two of our experts about their latest research on deal synergies and how the most successful acquirers have built a winning formula for value creation. You can listen to the episode on Apple Podcasts, Spotify, or Google Podcasts. In their conversation with communications director Sean Brown, they share some of their insights, several of which surprised even them. In this episode of the Inside the Strategy Room podcast, senior partner Andy West and partner Jeff Rudnicki, two of McKinsey’s most seasoned M&A experts, discuss what they learned from their recent work with clients of SynergyLab, a new firm initiative aimed at understanding how to most effectively capture synergies in M&A deals.
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