M&A study by Deloitte and University of St. Gallen
Unlocking the full potential of M&A – What it takes to be a Value Creation Champion
- 8 Practical tips from Value Creation Champions
- Creating value from M&A: cost synergies
- Creating value from M&A: revenue synergies
Our second M&A research project with the University of St. Gallen investigates how Swiss dealmakers create value in integrations.
Data was collected over a five-month period from interviews with board members, CFOs, M&A professionals and integration leaders from over 40 Swiss companies, in which we discussed historical deals, and approaches to synergy and value creation.
The study brings clarity to the factors for success and provides practical insight into becoming a value creation champion.
8 Practical tips from Value Creation Champions:
1. For cost synergies, be comprehensive, but prioritise value. Consider all the cost synergy levers, but pursue the most promising first.
2. Always consider procurement to unlock value. Value champions recognise the importance of procurement spending for extracting value. Procurement holds significant value that can be unlocked rapidly.
3. Go beyond cross-selling to find the total revenue synergy potential. Cross-selling is an obvious way to achieve revenue synergies, but pricing and new opportunities are often overlooked and under-played.
4. Quantify the revenue synergies in detail, it will help to make them credible and practical. Those who do quantify revenue synergies have a decent chance of achieving them.
5. Set directional targets early but readjust these if required. Making correct assessments early on is tough. Readjust targets if necessary, but don’t make ‘change in strategy’ or ‘poor execution’ the excuse.
6. Plan like a champion. Good execution starts with solid planning. Granularity in planning, ambition and commitment are essential.
7. Track to deliver. A critical challenge but imperative for successful delivery. Organisations deliver on performance indicators that are tracked.
8. Turn disciplined execution into an advantage. A disciplined focus on execution to achieve synergy targets makes a big difference.
Creating value from M&A: cost synergies
Creating value from M&A: revenue synergies
Successful value capture remains a challenge for companies, but some seem to have cracked the code for what it takes to be a value creation champion.
It entails pursuing more synergy initiatives, pursuing cost and revenue synergies in parallel, linking the operational assumptions to profit & loss impact, and planning early with available data.
About the joint study Deloitte – St Gallen University
The Deloitte report "Unlocking the full potential of M&A” studies M&A transactions that satisfy the following criteria: the acquirer is a Swiss headquartered business; deals exceed CHF 100 million in value, and transactions were closed within the last five years.