Integration & Separation Advisory

Integration Advisory

While the signing of the deal is often considered the most memorable moment for those involved in the M&A transaction, the integration (PMI) is a critical aspect for what lies ahead. Given that over 50% of mergers and acquisitions end in failure or underperformance (source: Harvard Business Review), adopting a structured PMI approach becomes a sound investment. Our team consistently plays a vital role in bridging critical gaps and aiding clients in delivering deal value.

While integrations are commonly approached with a standardized process, it is important to acknowledge that each merger has its own distinct characteristics, including pace, style, and focus. Adapting the integration strategy and process to accommodate these differences is key to its success.

We help you follow a well-defined and successful approach and methodology to address your integration needs comprehensively. Implementing a structured integration programme can be advantageous by ensuring clarity in scope and vision, minimizing disruptions to the daily business, as well as curbing costs. Our integration programme is typically divided into three areas, where the focus is on the following activities:

Integration strategy & Target operating model

• Defining the integration strategy and approach including overall timeline and end vision, based on client input.
• Setting up the integration programme and governance as well as establishing the IMO (integration management office)
• Helping develop the target operating model for the combined business to support you to achieve your integration strategy and drive value

Integration planning & management

• Helping create detailed integration plans and supporting the development of solutions and resolution of issues
• Ensuring the critical Day 1 delivery items are identified and effectively managed
• Planning and managing the detailed integration execution with functional experts and central coordination
• Advising the Integration Director and helping to co-ordinate workstreams around a structured integration programme
  

Value realization

• Supporting the development of synergy cases, as well as implementing a solution to track and realise them
• Managing the people and change management processes to minimise the risk of “brain drainage” from the business
• Tracking and managing overall integration milestones

Separation Advisory

Companies often undertake divestitures to generate capital for future growth opportunities or to restructure by shedding non-core business units. Divestitures are not just mergers in reverse – they are complex, counter-intuitive initiatives that require organisations to often undo years of integration and efficiency maximization. These transactions require specific capabilities that may not be readily available in-house. Yet, without the required skills and knowledge, the divested entity may suffer under the required efforts and the parent may sacrifice valuable gains or in fact incur deep losses, such as from badly constructed Transition Service Agreements (TSAs), stranded costs or ineffective solutions.

Deloitte brings a wealth of experience to each separation, and an outside-in perspective to the divestiture process. We support our clients in both sell-side and buy-side separations. Our approach is hands-on and pragmatic, based on many years working alongside our clients:

Carve-out strategy and scope

• Defining the scope of the separation perimeter and assessing the complexity of the proposed divestiture (e.g., by facilitating a separation complexity workshop)
• Helping you develop a separation handbook/information document that outlines a clear definition of the separation perimeter from an operational perspective, which is critical to define prior to approaching Buyers
• Establishing the separation program, implementing governance measures, and managing stakeholders
• Working alongside the M&A deal teams preparing entities for operational divestiture
• Helping you develop detailed separation plans and supporting the development of solutions and resolution of issues
  

Carve-out cost assessment & stranded costs

• Identifying and mapping costs impacted by the divestment and estimating replacement costs, taking into consideration the standalone operating model
• Assessing and quantifying any one-off cost areas
• Analyzing and estimating any potential stranded costs, and proposing actionable recommendations to minimize such costs
  

Functional planning

• Ensuring a successful Day1 by identifying critical tasks that must be delivered by functions such as Technology, HR, Finance and Legal
• Developing TSA schedules and collaborating with functional owners to operationalize the services
• Planning and managing the detailed separation with functional experts and central coordination, ensuring a smooth Day1