4 ways to preserve deal value through organization design

Carefully planning for new talent, roles, and reporting structures can help companies get through M&A transactions smoothly.

John Luce

John Luce

Principal, Advisory M&A Services, KPMG US

+1 312-665-1112

Few events in the life of an organization have more potential for disruption than an M&A transaction. An acquisition, divestiture, or other change in ownership can spark dramatic change in how people are employed and motivated in every part of the business. Figuring out how to keep the right people in the right slots to keep the organization running smoothly – even as some positions are eliminated – should be a top priority for deal teams.

“Too often, it’s not. And the consequences for deal value can be serious,” says John Luce, principal in the KPMG Deal Advisory & Strategy practice in Chicago. “Neglecting organizational design issues can cause a loss of key talent, confusion about new or overlapping roles, and poor morale.”

It’s critical that C-suite executives and transaction leaders make the right people and organizational design decision, manage risks, and effectively communicate the rationale and objectives of the deal to internal and external stakeholders. This should take place in four phases.

1. Define organizational risks

Without a thoughtful approach to defining and developing a model and structure to support operations, leaders will likely find themselves unable to align their stakeholders to mitigate potential risks that could derail a deal or erode the intended value. Those risks typically fall into several categories; gaps in business continuity, talent gaps, slowed or siloed decisions, or unclear roles and responsibilities.

2. Align design with the new business strategy

Companies make deals to take advantage of market trends or to adjust to changes in the environment. In either case, deals often serve as a catalyst to update business strategies.

“Organizational design needs to remain aligned with the strategy and people need to be connected to long-term vision – even in the face of change,” says Luce.

3. Define ways to realize synergies

Investing in organizational design upfront can also help the acquirer capture expected synergies. It’s important to consider both bottoms-up evaluation of the business processes, roles to execute the processes, and supporting technology, while also understanding the top-down financial synergy targets and their genesis. Initial synergy targets may need to be adjusted to a timeline that is more reasonable to ensure business continues to run smoothly.

4. Day 1 readiness

Well before Day 1, employees should now how and where they will fit into the new entity so that organizations can retain the key talent they need, provide crucial information for onboarding newly acquired resources, equip them to succeed in the new model, engage them in a collaborative ways of working, and connect them with leadership and other key resources to help them feel like they are a part of the new, combined organization.

Read the full report including several case studies that show the value that organization design provides by helping companies understand every aspect of the business that underpins its success.

To learn more about how KPMG professionals in Chicago can assist your company visit the KPMG Resilience Series site for information on events, thought leadership, and local subject matter professionals.