Using synergy curve as cornerstone of a successful merger

Using synergy curve as cornerstone of a successful merger: visualising speed at which synergies being delivered.

Extract from AT Kearney – Phil Dunne and Angus Hodgson:

Curves are magnificent things. Think of the Jaguar E-Type, the Sydney Opera House, or a Coca-Cola bottle. Mergers have curves too. Synergy curves. They reveal the measure of attractiveness of the deal, either up front as part of a due diligence exercise or when evaluating the deal’s ultimate success.

A synergy curve shows the accumulation of synergies over time, and it tells a thousand stories. It is the result of months of preparation, planning, and implementation. Its shape is defined by the integration strategy, the speed at which synergies are delivered, and the implementation capabilities of the integration team and the broader organization. It stands as a testament to the quality of the CEO’s vision and execution and will be scrutinized by the board, shareholders, and markets. It ultimately defines the success or failure of a merger.¹

Plotting a curve helps clarify the deal’s strategic rationale, which is fundamental to maximizing synergy delivery; once completed, it can be used throughout the integration to benchmark, plan, and track the synergy delivery rate. So knowing the curve’s likely shape both helps validate the rationale behind the merger and acts as a vital indicator as the integration progresses.

In this paper, we bring together our experience and data from many mergers to describe the types of synergy curves for various integration strategies, and we highlight the typical time frames for delivering synergies at an overall level and at the level of individual functional work streams. Our experience-based examples provide a benchmark to compare integrations simply by asking the question: What shape is your curve?

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