The PwC experts discussed the three strategic pillars on which an M&A integration must be based – strategic integration, financial integration, operational integration – and went on to address the four factors that make or break its success.
In one of the breakout sessions at the M&A Summit, David Desmet and Peter Opsomer (PwC Belgium) elaborated on transformational M&A deals, the success factors behind a fruitful integration and the optimal timeline and management of a carve-out situation. The chronicle of a captivating keynote.
While it was certainly a challenge to be scheduled right after a speaker of the calibre of Peter De Keyzer, the program of the M&A Summit was at the same time highly beneficial for David Desmet (Director of Integrations & Carve-outs at PwC Belgium) and Peter Opsomer (Deals Partner at PwC Belgium).
After all, the leading economist had already outlined the context in detail , allowing the M&A specialists to get straight to the heart of the matter.
Less deals, more value (but not in Belgium?)
A global study by PwC shows that 2024 saw a decline in M&A activity. The number of deals fell by 17 percent compared to the previous year. On the other hand, the total value of the deals increased by 5 percent. “The volume may be down, but the scope of the average deal turned out to be larger in 2024, which is a positive development”, David Desmet analysed. The shared expectations for 2025 were relatively positive as well – lower inflation, less financial pressure due to loosened monetary policies of banks , although it must be added that geopolitical uncertainty can always throw a spanner in the works.
But that is the international picture, not the Belgian one. Within our own country, not only the deal volume (-14%) but also and even more so the deal value (-53%) suffered heavy blows in the past year.
Nevertheless, the PwC duo wanted to sketch a hopeful outlook. “M&A remains a driver for growth. The current megatrends such as the defence investments, climate measures and the advance of AI might lead to extra M&A activity. On top of that, private equity exit pressure increases and will probably fuel M&A growth in the coming years.”
A context to which David Desmet immediately connected a first lesson for the participants of this breakout session. “The uncertainty that we see in the market will require a greater strategic focus and additional effort in the preparation phase. That will be key to ensure that you capture the value.”
Transact to transform
The theme of the M&A Summit was transformational M&A, to which PwC's ‘transact to transform’ approach is of course a perfect fit.
To leave no doubt about the exact scope, Peter first provided a definition of a transformational deal. “These are not simple buy-and-build transactions aimed solely at cost synergies but deals that are highly transformative in nature for both the target and the buyer.”
They can be prompted by either internal (e.g. a strategic goal, a crisis or a change in organisational structure) or external triggers (e.g. a market disruption or new regulations) and they sometimes even involve a complete switch of business model.
Important to know: “Transactions can form the foundation of a transformation or be the result of one. Whatever the starting point, carefully going through the entire preparatory flow – a deal cycle starts well before the deal is initiated – is crucial.”
Preparation is clearly the code word here, given the volatile market conditions and especially in a context of transformation.
A guide to successful integrations
The PwC experts discussed the three strategic pillars on which an M&A integration must be based – strategic integration, financial integration, operational integration – and went on to address the four factors that make or break its success.
Talent: Attracting and retaining talent is crucial, as is an alignment between the vision of the target's executive level and that of the buyer.
Technology: The right technological decisions are important, whereby it can certainly also be the system of the target that becomes the norm.
Early planning: The common thread of this presentation.
Experience: Bringing in external experience where necessary is a much-needed investment.
Some more telling figures from the keynote: “Amongst all acquisitions that lost value, companies spent less than 10 percent of deal value on integration. Whereas 68 percent of acquisitions that created value spend significantly higher percentages of deal value on integration.”
The fact that this absolutely requires a thorough, sufficiently explicit and pre-made plan is very much in line with the idea that you should always view such an integration as an almost continuous process. The closing of the deal should not be the end point.
Peter Opsomer: “The pre-acquisition phase usually involves M&A specialists who live off the stress of the deal. But once the deal is finalised, the integration tasks are passed on to people who are already busy with other work, so things can easily go wrong. A tight plan prevents that.”
“Take a holistic approach and start in time”
A proper strategic and organisational preparation – including a value-based approach towards portfolio assessment and capital allocation – leads (if deemed favourable) to acquisition and integration readiness or carve-out readiness. From there, a deal and the accompanying value creation plan can be implemented, and with it, the intended transformation can occur.
In order to make this flow clearer, the presentation ended with a detailed overview of the timeline and work streams involved in a carve-out (or integration) situation. David Desmet clarified the major phases that such a process involves – carve-out assessment (outlining the ideal scenario, identifying the precise perimeter) carve-out preparation (the already mentioned thorough planning, drawing up adequate TSA’s) and carve-out implementation – as well as the broad range of functional domains (operational, tax, HR, ...) that should be addressed along the way.
He concluded with two key takeaways: “Take a holistic approach and start in time in order to create value way before the deal is born.”
Text: Wout Ectors, SPYKE
Photography: Vincent Gorissen
