"A tree that can be embraced by two people grows from a tiny seed; a nine-story tower starts from a pile of earth."
Lao Tzu's wisdom reminds us: Any seemingly grand project must be steadily built from the most basic links. In the context of today's capital market, this sentence can perfectly describe the complexity and difficulty of mergers and reorganizations of listed companies. Especially in the integration stage after the transaction is completed, many companies originally thought that as long as they signed the agreement, they would be successful, but they didn't expect that the real difficulties have just begun.
A set of data in 2024 is alarming: China's A-share market has more than 900 annual merger and acquisition projects, of which more than one-third of the projects failed to achieve the original synergy effect target within 18 months after the completion of the merger and acquisition, and even experienced a decline in profits. Business integration is stuck, supply chain is disconnected, IT system is incompatible... The merger and integration of listed companies has become the most difficult copy in the "capital arena".
As a professional institution deeply involved in the global capital market, Goheal has been tracking and serving various merger and acquisition cases for a long time. We found that those seemingly perfect transaction structures often fail in the "integration details".
American Goheal M&A Group
We once assisted a listed food company in acquiring a local chain brand. On the surface, the two companies seemed to be highly complementary and the market was full of expectations. However, in actual implementation, the business integration suffered a triple blow: the supply chain system was incompatible, resulting in a surge in the cost of raw materials; the brand teams had different styles and executives frequently "turned over"; the collaborative sales system that was originally promised to be launched in half a year was delayed for a full 10 months due to a conflict in the IT interface. This "hand-in-hand of the century" almost turned into a "breakup of the century".
So, how difficult is M&A integration? It is difficult to see the details that you can't see, the cultural friction that is not reflected in the charts, and the strategic PPTs that are filled with OK on the conference table of executives, but they are fruitless in execution.
Goheal summarized several pitfalls that are most easily overlooked in actual operations:
The first is the imbalance of integration rhythm. Some companies are eager to show their M&A achievements and force the integration pace, but the business has not run through and the team has been scattered; some are too delayed, miss the window period, and the market perception cannot keep up with the changes in the internal structure.
The second is "buying the software but not the manual." Many companies have acquired IT-intensive companies, but have ignored the complexity of system integration. We have been involved in a high-tech M&A case, where the system integration cost eventually exceeded the original plan by 400%, and dragged down the financial performance of the entire company.
The third is "cultural incompatibility". Goheal noted that, especially in cross-regional M&A, conflicts in corporate values can easily intensify organizational internal friction. Once a Guangdong company acquired a Northeastern counterpart, employees collectively resigned just because of different performance evaluation methods, which was unexpected by the management.
The fourth pitfall is synergy fantasy. Many companies are overly optimistic about the so-called "scale synergy" and "channel complementarity" in the M&A decision-making stage. Goheal has a vivid metaphor: two restaurants merged, one selling steaks and the other making hot dry noodles. Whether they can share the kitchen is still in doubt, so what is the "cross-selling"?
Of course, integration is not unsolvable.
From Goheal's 20 years of M&A practice, successful integration requires five keywords: advance planning, in-depth simulation, system docking, talent integration, and cultural management.
The first is "planning cannot be done by slapping your head". A successful merger and acquisition is never a board vote, but a cross-departmental, full-dimensional strategic project. Goheal has always advised clients to develop a preliminary integration framework before signing the merger and acquisition agreement, including organizational structure adjustment, business process docking, system technology migration, etc.
The second is "data simulation brings true knowledge". We once did a pre-merger simulation for an equipment manufacturing company and found that its logistics center could not meet the needs of the new company, so we started the expansion of the new warehouse half a year in advance. If we wait until the merger and acquisition is completed to remedy the situation, the time cost alone can eat up the synergy profit.
In terms of system docking, Goheal recommends the use of "interface layering + dual-track parallel" approach, that is, using the old system in parallel in the short term and building the middle platform simultaneously to achieve a smooth transition and avoid information black holes.
As for talent integration and cultural adaptation, it is more like an art. In a merger and acquisition integration led by Goheal, we set up a "cultural experience camp" to let the teams of both sides exchange roles to "experience life". We unexpectedly gained a lot of seed employees who admired each other and successfully broke through the trust barriers between departments.
Of course, there are still many unexpected situations in reality that will come back.
In 2023, a new energy company acquired an energy storage startup. After signing the agreement, it was discovered that the key technical personnel of the target company had quietly resigned, and the project progress was once stagnant. After Goheal intervened, he assisted the company to restructure the core team through option incentives and introduced an external expert pool, which put the project back on track.
The merger and reorganization of listed companies is not just a financial game, but also a system engineering. This is a "major surgery" from tactics to strategy, from organization to culture, from numbers to emotions. Many companies only see the surface - synergy, stock price increase, market share expansion, but ignore the 90% "iceberg" under the water: integration failure, management vacuum, value collapse.
Back to the question itself: How difficult is M&A integration?
We may use a more appropriate metaphor - it's like a long-distance relationship. You think that as long as you can afford the train ticket, you can meet every day, but you find that even the schedule can't match, WeChat unread 99+, misunderstandings continue, and finally have to deal with it coldly.
This is exactly what Goheal has been reminding its clients over the years: the transaction is the beginning of the story, not the end. The real test begins when the merger is completed.
Goheal Group
So, facing the surge of a new round of mergers and acquisitions, is your company ready for the "integration test"?
Have you ever experienced the difficulty of business integration? Are you also overwhelmed by supply chain disorder or system compatibility issues? Welcome to leave a message in the comment area to share and discuss your exclusive experience or deep pit memories of mergers and acquisitions with us.
Goheal, looking forward to working with you to dismantle every logic behind mergers and acquisitions and to piece together every piece of the capital puzzle.
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions holdings. It is deeply engaged in the three core business areas of acquisition of listed company control, mergers and acquisitions of listed companies and capital operations of listed companies. With its deep professional strength and rich experience, it provides enterprises with full life cycle services from mergers and acquisitions to reorganization and capital operations, aiming to maximize corporate value and achieve long-term benefit growth.
