Leading through uncertainty: Navigating delays in M&A deals

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The traditional execution pathway went from public announcement of a signed deal to pre-closing legal, operational, and financial diligence to integration beginning on day one. Experienced dealmakers followed a clear playbook and knew the time and resources required.

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Sources and impact of M&A delays

Times have changed. Over the past two years, some 30 percent of the 50 largest global acquisitions (by deal size) experienced delays attributable to factors beyond their control—up from 15 percent in 2020. On average, deals stalled for six months, but the longest delay exceeded 15 months. Several factors were to blame—notably, heightened geopolitical tensions, increasingly complex integration (due to more cross-border transactions), and obstacles to securing shareholder approval.

Perhaps most important, in the decade that ended in 2022, greater scrutiny by regulators extended the time needed to advance from announcement to approval by 35 percent for the 100 largest global deals done each year. From 2017 to 2022, lengthy regulatory reviews in the US and Europe increased by 50 percent.

Heightened regulatory reviews have grown more prevalent and complex, adding considerable time and uncertainty and increasing the risk of extended delays. As one seasoned M&A executive told us, “The complexity of regulatory approvals has grown dramatically. When I did my first deals, all the regulators were looking to Europe. The European regulators were the harshest and most strict; all other regulators would follow. Today, that is no longer the case. Most countries have their own bodies who act independently. Getting European approval does not mean you get French or German approval.”

Heightened regulatory reviews have grown more prevalent and complex, adding considerable time and uncertainty and increasing the risk of extended delays.

Deal delays can destroy significant value and undermine momentum and morale in several ways, including:

  • Delays prolong distraction from business-as-usual and core activities, especially because critical talent stay out of their day jobs longer than planned.
  • Delays open a window for competitors to prepare responses, poach customers and employees, and take advantage of the uncertainty to leap ahead of encumbered peers.
  • Retention of internal and external M&A integration team members is difficult and costly.
  • The significant costs associated with delays, such as holding additional equity capital and incurring one-time costs, raise the already high costs of capturing synergies.
  • Delays adversely affect employees who often experience tremendous anxiety, fatigue, and wavering confidence and commitment, especially when the deal is large and the uncertainty is prolonged.

In this environment, dealmakers need a clear and coherent plan. From the get-go, deal planning should include attention to identifying and navigating delays beyond company control that may well occur, especially during the often-overlooked period from announcement to close.

4 Rs of managing deal delays

Time and again, our experience in helping clients navigate delays and the perspectives shared by M&A executives who have weathered delays on major deals have highlighted the power of "4R" planning—reflect, revise, reframe, and reinvigorate—to sustain momentum.

Reflect: Assess all delay scenarios, investing as much effort in developing contingency plans as in building the integration timeline

Once a delay materializes, the acquiring company faces serious time constraints and must be confident of the deal logic and the teams’ readiness to flex immediately. Readiness demands more than realizing that a delay might occur; it requires determining the most likely delays, understanding their parameters, and defining practical contingency plans—the actions most likely to mitigate their impact. The most flexible teams are teams that have been focusing narrowly on the tasks most critical to a successful day one—not the nitty-gritty details of integrating the two companies after the deal closes.

Readiness demands more than realizing that a delay might occur; it requires determining the most likely delays, understanding their parameters, and defining practical contingency plans.

As the senior M&A executive recalled in our interview, “We prepared different scenarios after setting a very clear strategy, presenting an aligned perspective to the market.”

Honest assessment of what leaders can and cannot influence in the event of every likely delay is critical. Some delays are, in fact, beyond their control, and acknowledging that reality builds trust in leadership and the integration team.

Effective integration planning across all delay scenarios—including the best-case scenario, where no delays materialize—should align resource plans with key integration milestones. Planning to add resources at each milestone, such as regulatory or board approval, instead of launching all teams at announcement can avoid wasting cost, effort, and commitment if delays do happen. This incremental approach can also keep those critical components of deal success aligned with increasing certainty that the deal will proceed.

Our executive interviewee raised a question worth considering: “Does day one need to be all-encompassing, or do you focus on certain elements like go-to-market and the defensive strategy? Companies constantly want to make day one bigger than it needs to be.”

Every potential delay that leadership might need to handle requires an action plan focused on people management. Most integration efforts launch with agile teams that include internal resources and external contractors tasked with ensuring operational readiness. The action plan should detail how to streamline that core team structure quickly if the delay occurs, especially how to reduce reliance on contractors to control costs. But the plan should maintain adequate resources to limit disruptions to momentum and decision making.

This early attention to potential delays creates the opportunity to demonstrate the integrity and transparency that are essential to effective integration leadership. In the process, it lays a strong foundation for fostering an open culture that aligns expectations across all stakeholders.

Scenario planning also offers ancillary benefits. As our executive interviewee noted, “Even when you prepare scenarios that you don’t need, they can become very useful when it comes to portfolio management later on.” Plus, scenario planning deepens understanding of the target’s business and what both companies are and are not willing to give.

Revise: Pivot to value-maximizing actions to limit downside and unlock potential upside

If a delay occurs, the team should assess its impact on the timeline and look critically at the deal’s expected value. The acquiring company must make a go/no-go decision based on assessment of whether the delayed deal still stands to realize its synergy potential and to create the promised value. Sometimes a regulatory delay provides a compelling reason to exit the deal—even given any reverse break-up fee. If deal leaders remain determined to close, leadership should feel certain of the deal value and be able to articulate the deal logic to the board, shareholders, the public, the target company, and other stakeholders.

If the deal remains a go, the operational focus should shift to protecting value. This requires identifying a nucleus of deal team members who can keep things moving forward during the delay. Because the other team members will probably be required when the delay ends, finding them temporary positions elsewhere in the organization is usually wise.

The acquiring company should also explore whether the delay-altered timeline creates opportunities to advance synergy-capture initiatives, such as expediting consolidation post-close. The team should revisit the plans and designs for these initiatives accordingly and then watch vigilantly for further delays that would require mitigation strategies. This willingness to shift course as conditions change can go far toward avoiding deal fatigue and distraction.

Reframe: Craft the narrative and communicate it clearly

Delays can send shockwaves through the acquiring and target companies, especially the deal and integration teams. At the same time, competitors are poised to capitalize on the disruption by taking quick, tactical actions. Without immediate, effective communication to internal and external stakeholders, confusion and uncertainty can paralyze employees, encourage competitors to act, send customers running for the hills, and shake market confidence in the deal.

The acquiring company must be ready to communicate a simple, compelling narrative internally and externally. This requires clear, concise, consistent messages delivered from the top—by the CEOs, integration directors, and other business leaders. Both the messages and their delivery should reflect leadership’s confidence in the chosen course of action and in the benefits that the deal will deliver to both the acquirer and the target, despite delays.

Our executive interviewee advised, “Equip your leaders to do very heavy stakeholder management—more than what they would do in their normal jobs. That includes talking with clients, employees, government bodies, and whomever else constantly.”

Reinvigorate: Engage people to sustain momentum

Effective engagement of people at all levels of the merging companies is critical to the success of any deal and assumes even greater importance when delays happen. Delays tend to magnify typical employee concerns—such as job security and relocation requirements—and often reduce motivation, bring feelings of exhaustion and burnout to the surface, and increase attrition risk.

Effective people management that keeps people energized and engaged during delays is key to sustaining momentum. Both words and actions matter.

Effective people management that keeps people energized and engaged during delays is key to sustaining momentum. Both words and actions matter.

Our executive interviewee recommended, “Put in place non-financial programs beyond just leadership attention. I am a strong believer in development programs for individuals and categories of the workforce. If people feel the company is still investing in their development, they will hang onto the company. It creates a belief there is a future here. Otherwise, why would they invest? Don’t do the development for the sake of it; instead, use it as a means to prepare them for the future, to give them a future orientation.”

Engaging the acquiring company’s integration team is especially important. These people have often made deal-related career choices, left other teams, and invested heavily in the deal effort for a significant period of time, so they suffer from deal fatigue. Giving the nuclear team tasks like addressing deal complexities (think technology integration), locating additional potential synergies, and responding to regulatory inquiries can sustain momentum and morale.

Delays can erode trust among the acquirer’s employees and management. Leaders need to demonstrate empathy—for example, by meeting one-on-one with affected staff and celebrating efforts to date. Sending regular updates on delays (timing and impact on business-as-usual roles) and providing channels for employees to voice concerns can go far toward keeping their trust. Leaders need to remember that many employees and managers dedicated to business as usual also suffer from deal fatigue, as the deal diverted significant resources and energy from their efforts and probably changed project timelines to fit the integration timeline.

Delays can create great uncertainty among the target’s employees and leaders. Delays typically trigger concerns about deal completion and the quality of any completed deal and exacerbate already considerable job security concerns. Clear communication of any delay-related changes in roles and responsibilities and of delay expectations—such as length and the path forward—and reiteration of the deal’s value and logic can greatly allay those fears and reduce the risk of competitors poaching top talent.

The boards of both companies require deliberate efforts to keep them engaged. The board of the acquiring company must understand potential delays and realistic trade-offs and guardrails so they can make critical decisions quickly, when needed. The acquirer should also find ways—within legal constraints—to keep the target’s leadership team involved.

Delays often lead customers of both companies to lose faith in the organizations and even switch to competitors, especially if they see demoralized staff delivering lower-quality service than usual. Customers often fear that regulatory action reflects negative views of the merging companies. Both companies must make every effort to maintain business-as-usual service quality and communicate the facts about regulatory action clearly and consistently.

In today’s M&A environment, dealmakers and integration teams should expect delays that are beyond their control. But delays do not have to be deal-breakers. Early planning and effective execution of those plans can sustain momentum and morale and keep deals on course to significant value creation.

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