The terms ‘merger’ and ‘acquisition’ are usually joined together, hence the abbreviation M&A, but it is possible (and often preferable) to have one without the other.

For example, buyers can have an acquisition strategy that does not involve integrating two businesses. A target can be left to operate independently.

Similarly, the merger of comparable businesses does not require one party to buy the other. There could just be a meeting of the minds and a commitment to build a stronger, better business.

The beauty of this strategy is that there’s no large capital outlay or ongoing debt burden in order for potential synergy benefits to be extracted. The hard part is finding the right partner.

But even then, it’s not all hearts and roses. As discussed in my previous articles, synergy benefits are elusive, which is why I liken them to the pot of gold at the end of the rainbow. They play hard to get.

Over the past five years, AZ NGA and our underlying small-to-medium enterprises (SMEs) have completed over 70 transactions. The majority of those transactions have been acquisitions. Some have involved mergers. Of the mergers, some but not all have achieved their stated synergy targets.

Based on our experience, here’s what we’ve learned.

Three tips for maximising synergy benefits

  1. Dispatch a S.W.A.T. team

Like any S.W.A.T. operation, mergers need an effective leader, skilful people and precision planning.

It is impossible for advisers and accountants to do their day job well and manage the integration of two businesses. Whenever a company’s management team is distracted for a material period of time, home-base health suffers.

A smooth integration requires resources dedicated to the task. That could be a single person or a small team, depending on the size and complexity of a deal.

More than likely, accounting and advisory SMEs will need to go outside their organisation to find someone with the required operational experience, project management capabilities and interpersonal skills.

A key benefit of using an experienced external party is that they will be more realistic about what’s achievable and also more disciplined around measuring success.

Regardless of whether you choose internal or external resources, everyone involved in a merger should have clearly defined roles and responsibilities, and should be supported to focus purely on their specific job.