Ted Rouse is the co-leader of Bain & Company’s M&A practice with a specific expertise in merger integration. Mr. Rouse joined Bain & Company in 1982 and became a partner in 1988. He was the managing partner of the Chicago office for ten years and led the firm’s industrial practice for several years.
M&A viewpoint
When you consider the simple fact that no two deals are the same and that no two deals should be integrated in the same way, the key to effective acquisition integration is to integrate where it matters:
1. Follow the money by structuring the integration around the key sources of value.
- Every merger or acquisition needs a well-thought-out deal thesis, clearly stating how the deal enhances your company's strategy.
- Nail the short list of critical actions that will deliver on your deal thesis while ensuring rigorous execution on the long list of integration tasks every deal requires.
2. Tailor the integration to the nature of the deal by aligning your integration actions with the deal thesis.
- Clearly spell out if this is a scope deal (broadening the portfolio or capability base) or a scale deal (increasing market share within existing businesses).
- Our research shows that it is important to avoid indiscriminately combining the companies at the risk of compromising the key business model elements, people and culture that made the acquired business successful in the first place. This is particularly true with scope deals.
- Scale deals, designed to achieve cost savings, usually require a comprehensive integration, whereas in deals that expand the scope of the business a selective integration is typically more appropriate.
- Some deals have elements of both scope and scale, making it critical to think about the right level of integration depending on what you wish to retain vs. where to drive for cost efficiencies.
Read more on this topic under The 10 steps to successful M&A integration.
