According to a recent Deloitte M&A for the 2019 trends report, over 70% of personnel they surveyed in both corporate and PE environments expected to see a continued trend uptick in deal volume and deal size. Reports are bullish and steady in regards to a keen focus on continued diversification of an organization’s portfolio, expanding past recent years’ focus on pure technology acquisitions, to looking to acquisitions that drive additional customer base gains in different geographic regions.
However, in a review of past deals, there is still a fairly middling rate for successful integration of acquired companies. Multiple external factors running from an increased regulatory environment or concern around legislative stability can influence the success of a deal – but those are increasingly the intangible levers that companies have a harder time influencing. What is directly influenceable, however, are the internal organization dynamics which are frequently cited as drivers for acquisition failures. Effective integration is the leading causal factor pointed to by both corporations and private equity companies as a challenge, with 19% of private equity personnel noting a failure to integrate culturally as a primary reason for deal failures.
Network analysis studies allow companies and private equity firms to fact-check the data and assumptions before, during, or after the integration phase of mergers and acquisition deals. Not only does network analysis provide a quick turn-around product for deep insight into how acquired companies are truly operating, but it also provides concrete visibility into opportunity areas prior to making any major process changes. Including areas such as: who the go-to people and teams are, where the areas of influence lie – who everyone is turning to for getting the job done, where break-downs in communication and coordination are happening, where perceived decision making blockages are slowing execution, and the impact turnover may be having on personnel departing (and taking their knowledge base with them).
Further, network analysis studies don’t only show a static shot of how an organization judges itself operating, they also allow leaders to understand predictively how potential process or organization changes may impact operations – what to watch out for and where to ensure to have a plan around. Having an in-depth understanding of not simply how a company operates, but where the best areas to plug into them from a data driven perspective is an obvious huge value differentiator when it comes to elevating the percentage of a successful integration.
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