Size the synergies and plan how to unlock them

Your report suggested a move on at least one of these two questions:

• how big the synergies are, net of what the deal costs you;
• how easily they can be unlocked.

This move guide builds the synergy number from line items and named accounts. It nets off what the deal could lose you, and weights each line by how much of it is in your control. Then it costs, times and staffs the unlock before close.

1. When it applies

Use this move guide if your report placed either question at "Red flag" or "Doubtful".

If both already sit at "Supported" or higher, skip this move guide.

The unlock question is a warning question on the strategic buyer check. A low answer moves the report's verdict toward "Slow down".

2. What to do

Five steps. They take three to four weeks.

1. Build each synergy bottom-up, from line items and named accounts.
2. Net it for what the deal could cost you: customers both parties serve, contracts that go to tender, and channels that conflict. Keep only what survives a hostile review.
3. Weight each synergy by how much is in your control. Mostly in your hands: three-quarters. Half in your hands: a half. Mostly in others' hands: a quarter.
4. Map the cost, time and dependencies of each unlock, and name the person who will lead the integration.
5. Check the plan against what your past integrations actually delivered.

Table A below holds the build and the unlock.

3. What to produce

One table.

Table A. The synergies, netted and weighted

A synergy weighted at full value assumes everyone else will cooperate.

4. A worked example

Illustrative. Written for this move guide. It describes no client.

An insurance broker is buying a smaller rival. The board paper says synergies are "10% of the combined cost base".

The build.

• The deal team built each line instead: two offices into one, one claims system, and premium the combined sales team could win. The total came to less than half the board paper's figure.

The netting.

• Fifteen clients use both brokers to spread their risk. Some will move part of their business elsewhere, and that loss came off the total.

The unlock.

• One claims system needs a migration taking a year and the broker's best two system people. The integration leader was named before signing.

Four weeks on.

On a retake, both questions could be answered at "Supported".

What it looked like in our work

From our own work. Figures changed.

For a buyer of a building-products manufacturer, our due diligence sized each synergy twice. Once at its full value, and once weighted by how likely it was to land. Cost synergies mostly in the buyer's hands kept three-quarters of their value. Sales the other party had to win kept a quarter.

Weighted and netted, the synergies came to under half their full value. The largest line rested on one party buying its main input more cheaply, which needed checking before anyone banked it.

5. Effort and dependencies

What you need

• The synergy register from checking the fit and finding the synergies.
• What your previous integrations planned, and what they delivered.

How long

• Three to four weeks.

What gets in the way. We have seen this in our own work:

• A lease in the way. In a building-products deal, a site consolidation was blocked by a lease that ran for years.

6. How will you know it worked?

The test is whether each line survives a hostile review, and whether the unlock has a leader and a budget. Retake the check when Table A is full. Each of these should be true when you answer:

The worked example is illustrative.

Think we've used your work without proper credit? Tell us and we'll fix it.