NEW YORK, Oct. 13, 2008 (GLOBE NEWSWIRE) -- According to PricewaterhouseCoopers' M&A Integration Survey Report 2008 released today, the early and timely execution of fundamental integration initiatives such as operating procedures, information systems, business processes, people imperatives and management practices are directly related to capturing deal value.
The period from deal announcement through the first 100 days after deal close showed to be crucial to success, with higher levels of deal performance achieved when certain integration tasks were started and completed within that timeframe. The survey found that taking initiative during this critical period leads to improved profitability, cash flow and productivity.
"The old adage 'timing is everything' has never been more true than when it comes to integrating mergers and acquisitions," said Gregg Nahass, PricewaterhouseCoopers Advisory partner and US Practice Leader for M&A Integration. "The first 100 days post-close is a true window for change and opportunity. When organizations understand the interdependencies of integration initiatives-and speed up the execution of these activities-they can stop leaving deal value on the table and start delivering greater return to their stakeholders."
The findings suggest the timeframe in which it is possible to make significant, positive change is very short. The period from deal announcement through the first 100 days after closing the deal is particularly significant, because it is then that people are most open to new ways of thinking and working.
"Companies frequently report that their deals are more successful strategically than they are financially or operationally, and this survey is no exception. That's because the strategic goals set for a deal may actually be easier to achieve than the longer-term financial and operational targets," added Mr. Nahass. While 64 percent of survey respondents characterized recent deals as a significant success from a strategic standpoint, only 44 percent said they experienced significant success in achieving their post-deal financial goals. Even fewer, just 38 percent, experienced success in reaching their operating goals.
The PwC M&A Integration Survey Report, which outlines the current state of M&A integration practice and its impact on management's assessment of deal success, found:
* Faster integration in the first 100 days post close contributes to improved profitability and cash flow * Effective communication in the first 100 days post close contributes to improved employee productivity * Integrating operating policies in the first 100 days post close helps employees focus their efforts which, in turn, contributes to accelerated positive performance
A full 91 percent of survey respondents said they achieved "very favorable" or "somewhat favorable" profitability results if deal integration work was completed faster than their company's typical pace of work, as compared to only 62 percent when work was completed at a slower than normal pace.
Similarly, 82 percent of respondents said they achieved favorable cash flow results when the integration was faster than normal, as compared to 66 percent when work was slower than normal.
"The basic principles of what we refer to as an Accelerated Transition(tm) are straightforward: improve your odds of achieving the right synergies and capture the desired deal value by ensuring a fast-paced integration using a disciplined process, well-coordinated launch, and relentless focus on the key value drivers behind the deal," said PwC Advisory principal Joe Balog.
Other key findings of the Survey include:
* Integrating information systems is often considered the biggest post-close challenge -- Over half of respondents - 58 percent - say information systems integration issues prove to be a difficult integration challenge to resolve. And nearly half of respondents - 45 percent - report that these challenges have directly contributed to "significant" or "moderate" delays in meeting the goals established for the deal. * Addressing people and cultural issues early is essential to capturing deal value -- CEOs realize the people agenda is a key priority, however, few think their management spends adequate time on this matter - despite the fact they acknowledge issues related to people integration present the biggest barrier for deal success.
"You could be losing deal value by failing to plan soon enough or act fast enough. Accelerating all aspects of the transition contributes to improved results enterprise wide," said PwC Advisory principal Jim Smith.
"There is no value in a prolonged transition. If you're not planning early enough and acting fast enough, you could be leaving value on the table. Delaying integration activities adds costs, slows growth, erodes profit and reduces or postpones the payback. When done properly, the value of a deal-and the opportunities it presents-may be much more than you think," added Nahass.
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