As Wesfarmers revises the terms of its bid for Coles Group to make it more attractive to Coles shareholders, it has history working in its favor. It was the successful 2001 acquisition of hardware leader Bunnings that gave Wesfarmers the retail business confidence to pursue Coles. Since 2002, Wesfarmers' purchase of Bunnings has contributed to average 8.7% increases in annual revenues for the hardware company and 9.6% increases in EBIT.

In Australia, M&A deals are on the upswing—with the value of completed M&A deals increasing 181% in the first six months of 2007 over the corresponding period last year. But not all acquiring companies are as fortunate as Wesfarmers was with Bunnings. When it comes to mega deals—those over $250 million, which on the rise in Australia—our research shows that only three in 10 created meaningful shareholder value during a six-year period between 1995 and 2001. Slightly more than half actually destroyed value.

But world-class acquirers beat these odds. Through interviews with scores of top acquirers, as well as our analysis of 1,700 large companies around the world, we found that the most successful among them share a key trait: They expect the unexpected and plan for contingencies. The top acquirers can spot difficulties and act quickly. After a deal is announced, the first step for the acquirer's CEO is to clearly explain the transaction to employees, investors and customers. But that's only half the communications challenge. The other half requires the CEO—to put it bluntly—to shut up and listen. That's a lesson that Bill Amelio, CEO of Lenovo, China's largest computer company, learned during his global travel to oversee integration of IBM's personal computer division, purchased in 2004 for $1.25 billion.

He observed that US and European IBM executives incorrectly concluded that, when their Chinese colleagues from Lenovo were nodding, it meant they agreed. In fact, they were simply listening. To avert likely management disputes, Lenovo's US and European executives have learned that a nod doesn't necessarily mean agreement, while the Chinese are being taught better confrontational management skills. Amelio's act of listening allowed the kind of prompt action that keeps mergers on track.

Monitoring customer satisfaction is always important, but never more so than after a merger. Once integration is under way, product disruptions and personnel changes can drive customers into the arms of competitors. Consider food giant Kellogg's merger with snack-food-maker Keebler in 2001. When Kellogg's attempt to integrate Keebler's superior distribution system hit a snag, the flow of popular products to retailers suddenly dried up. Because order fill rates—the percentage of orders that are successfully shipped-are the key to the satisfaction of retail customers, the decline sent a strong warning signal.

Kellogg's quickly saw that the conversion team needed to take more care in working out the kinks in each distribution centre before it "went live". To adjust, managers focused on a single centre until it was meeting its fill-rate targets. Then—and only then—would the team move on to the next conversion. Kellogg's also reached out repeatedly to customers whose orders had been delayed. By quickly addressing customer issues, Kellogg's got its integration back on track within weeks.

Problems with employees and customers tend to crop up soon after a deal is done. Operational problems, however, tend to develop more slowly. When New York-based Citigroup acquired Travelers Group, the merger was predicated on cross-selling Travelers insurance and brokerage services to Citigroup customers. When the cross-selling failed to materialize, Citigroup's early-warning system kicked in. Citigroup spells out short-term financial goals for acquired companies and builds them into the budget; if they drop, the numbers are highly visible. The problem was traced to a personality clash between two top executives that delayed the resolution of several key cross-selling issues. The solution: departure of one of the executives and, to calm Wall Street, early delivery of promised cost reductions. A year later, cross-selling was gaining traction as Citigroup stock rebounded, reflecting investor confidence in the merger team.

The moral of the story: The secret to a healthy merger is keeping a close eye on internal corporate indicators and a finger on the corporate pulse. And when the alarm bells go off, a disciplined response gets a shaky deal back on track.