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In M&A, Successful Acquirers Master Process and Systems Integration

Bain Partner Laurent Hermoye outlines five core elements that can make or break deal value.


In M&A, Successful Acquirers Master Process and Systems Integration

Successfully integrating business processes and systems is key to having a repeatable M&A capability. Laurent Hermoye, a partner with Bain's Mergers & Acquisitions practice, discusses the benefits of mastering best-in-class practices for integrating acquired companies.

Read the Bain Brief: Process and Systems Integration: A New Source of Competitive Advantage

Read the transcript below. 

LAURENT HERMOYE: Frequent and material M&A activity can deliver superior economic impacts. This holds up for years and across industries. To build such an M&A capability, you need to be able to build a very specific muscle, which is the mastering of business process and systems integration.

But why is it so? The reason is twofold. First, technology-enabled synergies can realize up to 50% of the total synergies, which has a significant impact on the total deal value. Second, onetime costs of process and system integration can go through the roof. And the reason is that the deals are becoming more and more complex, such as, for example, when you have a carve-out. In particular, when you think about business process and systems integration, this can really make or break the total deal value.

But now, what do those leaders do differently that enable them to be successful in such process and systems integration? They think about the IT integration hypothesis early in the game. That is, that they know what to integrate and what not to integrate. They think about value early in the game as well, where they identify what systems to integrate up front to accelerate the synergies.

They are decision-oriented. They recognize that key decisions need to be taken early in the game to make sure that you'll be successful in your process and systems integration. After, they also realize that it is critical to think about the digital transformation at the same time as the integration. You don't first integrate and afterwards optimize. Last but not least, they realize that the onetime costs of the integration are very important and that you need to reassess them in the beginning, as you never really know what you get out of the deal.

Those five core elements should enable you to be successful in your upcoming deals and be more efficient and more effective and hopefully build the right capabilities for the future ones.

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