How Deals Are Getting Done

A new study by KPMG finds that while prognistications for the pace of mergers and acquisitions remains grim, good deals are being done by some companies. How?

"Doing Deals in Tough Times" examined the performance of more than 160 U.S. and European countries and divided them into two categories: companies that achieved their expected synergies more than 75 percent of the time and "less successful companies," those who achieved their objectives less than 75 percent of the time.

From that research, KPMG distilled the practices that made those M&A teams more successful. Among the key findings:

• Due diligence: “Champion” teams used more resources to verify a broader set of business issues to help refine valuation. Champion companies spent a third more time in the due diligence process than the less successful companies.

• Post-deal results: Leading companies measured the performance of their corporate development managers by using post-deal results. Some 60 percent of champion companies gave their business development teams responsibility to make ready the new business for Day One, twice the level of involvement reported by the least successful organizations.

• Allocating resources: Successful M&A teams understood how to find, train, and commit the right people within the organization to meet deal objectives. Champions committed 50 percent more resources to rotational programs with a 24-month time commitment, nearly twice that of their less-successful counterparts.

• Effective Project Management Office (PMO): Leading teams found the optimal leaders to oversee an integration PMO, and effectively managed cross-functional activities. Nearly 20 percent of the less successful deal-makers said they didn’t have an integration budget developed during due diligence. By contrast, 90 percent of the top acquisitive companies started planning integration during their due diligence phase.

• Stabilizing the business: Leading M&A teams worked quickly to stabilize the new organization as soon as the deal was done. Successful companies stabilized new businesses 33 percent faster than less successful deal-makers.