The US federal landscape continues to undergo significant change, with leaders facing a variety of complex challenges. While some agencies have experienced deep cuts to personnel and resources, others have seen double-digit budget increases. Correspondingly, government organizations are being reorganized or, in some cases, going through mergers or acquisitions.
In the federal context, a merger is the consolidation of multiple agencies or departments into a single new entity. For example, in 2025, the US Department of Health and Human Services proposed the creation of the Administration for a Healthy America, which would combine five components (OASH, HRSA, SAMHSA, ATSDR, and NIOSH1), aiming to better coordinate chronic care and disease-prevention programs and align health resources for low-income Americans.2 An acquisition refers to one agency assuming the full responsibilities of another agency or part of an agency.
Private sector M&A is widely reported on, and while they have a mixed track record, they often demonstrate how large, independent organizations can come together to create value. However, government M&A occurs far less frequently. Although the public sector differs in important ways—such as lacking a profit motive, operating under distinct governance structures, and moving through slower decision cycles—core change-management principles still apply. This article explores five principles, in particular, that can help ensure public sector M&A is successful.
Challenges unique to internal federal mergers
If managed well, federal M&A can present a valuable opportunity to streamline operations, reduce redundancy, and sharpen mission focus. By consolidating overlapping functions, such as back-office support, agencies can improve cost efficiency through shared services and infrastructure. These transitions can be a catalyst for making strategic investments, such as modernizing technology and digital systems through cloud migration and incorporating AI tools into daily workflows.
However, M&A can come with distinct challenges for the public sector. Deep-rooted cultural silos, which often are more present in organizations not driven by a profit incentive, can hinder collaboration and adaptability. Additionally, complex bureaucratic structures and the need to remain accountable to multiple stakeholders—including the Office of Management and Budget, Congress, and inspectors general—can complicate decision-making. The overall pace of change tends to be slower and less predictable than in the private sector. These challenges underscore the need for a clear vision for change, deliberate planning, and sustained leadership commitment to navigate transitions effectively.
Five principles for merger success
This article synthesizes lessons from decades of private sector M&A experience to suggest a path forward for public sector leaders. Five principles can guide these leaders as they navigate M&A and work to avoid common pitfalls (see sidebar, “Pitfalls to avoid”).
Start with a clear end-state vision
Disney acquired Pixar in 2006 with a goal of rejuvenating its animation division and increasing its leadership in storytelling. The integration was anchored in a clear vision of creative renewal, leveraging Pixar’s innovation-driven production model. The vision was not about merging organizational charts but about delivering better storytelling at scale. Every integration decision, from leadership roles to workflows, was evaluated against that goal.3
For federal leaders restructuring agencies or merging functions, the focus can be on mission delivery outcomes, not just efficiency.
Define what success looks like in terms of mission delivery. In an environment where US federal agencies are being radically restructured, leaders can focus on shaping a new, cohesive vision for achieving their mission. McKinsey research shows that future-ready organizations are defined not only by how they are organized but also by the clarity of their purpose and value agenda.4 Leaders can define success in terms that matter to the public—such as improving service access, reducing application timelines, or strengthening cybersecurity defenses—and use that as the North Star to guide integration. This clarity gives frontline leaders line of sight into how to shift resources and talent to align with priorities.
Translate vision into measurable outcomes. Leaders can then translate that mission into tangible organizational elements, such as centralized departments, distributed units, initiatives and programs, and key functional capabilities. Establishing clear metrics can help leaders measure success. For example, rather than adopting a generic “modernize operations” goal, leaders might embed tangible targets, such as decreasing permit processing times by 30 percent or increasing digital adoption by constituents by 50 percent.
Establish strong governance early
When the Defense Health Agency took over all military treatment facilities (a four-year process that began in 2018), it established a joint integration management office that was staffed by cross-service subject matter experts and focused on clarifying decision rights for budgeting, IT, credentialing, and other supporting processes.5
Government leaders can consider three governance lessons from both public and private sector M&A:
Prioritize service continuity from day one. Getting everything right on day one is unlikely, depending on the amount of time organizations have had to prepare. However, leaders can identify and prioritize critical “no fail” functions that cannot afford disruptions. Leaders can allocate essential staff and resources to these functions in the interim to ensure continuity while they plan and execute the full integration.
Form an empowered integration management office. An integration management office can serve as the central hub for planning, coordination, and execution, ensuring dedicated time and resources to lead through the transition and accelerating decision-making across functions and departments. This office can include people from cross-functional areas such as operations, human resources, IT, legal, and finance to set leaders up to address all critical aspects of the merger comprehensively.
Clearly define decision rights across the merging organizations. When roles and authorities are ambiguous, teams may duplicate efforts, overlook critical tasks, or defer decisions unnecessarily. A transparent framework outlining who decides what and when establishes accountability and keeps integration on track. This is especially critical for the public sector, where decision-making and change already tend to happen slowly.
Redesign the operating model—not just organization charts
A comprehensive review of the operating model can help ensure a merger or acquisition is more than an administrative effort. This means going beyond the tactical work of redesigning organization charts to being thoughtful about process redesign and the culture and people needed to support it.
During the merger of several public sector defense entities to form a new organization, senior leaders deliberately prioritized culture and people as part of the integration, rather than treating them as secondary to structure. The organizations include uniformed military units, tens of thousands of civilians, multiple geographies, and a set of core missions that had rapidly evolved to keep pace with the geopolitical context. Instead of subsuming one organization into the other, leadership preserved core strengths from each legacy entity, empowered cross-functional teams drawn from multiple communities, and intentionally designed new ways of working to encourage collaboration and innovation. By respecting legacy identities while establishing a shared mission and culture, the integration helped retain critical talent, reduce friction across functions, and position the new organization as a catalyst for long-term capability development rather than a purely administrative consolidation.
Federal leaders can consider treating culture, people, and organizational issues as measurable, manageable, and critical. Two specific actions can help:
Consider forging a new culture as a strategic enabler. Culture is just as critical as structural integration. Differences in values, work styles, and decision-making processes can limit effectiveness if not explicitly addressed during integration. Mapping these differences early in the integration process can help leaders anticipate friction points before they undermine progress. Use of diagnostics, such as pulse surveys and focus groups, can surface hidden concerns, identify cultural clashes, and guide targeted interventions.
Retain top talent for continuity and long-term success. At the same time, retaining key talent is essential to continuity and long-term success. Providing clear, transparent career pathways during the transition helps reduce uncertainty, boost morale, and ensure that top performers remain engaged and committed to the merged organization.
Sequence change through 100-day and 365-day plans
When the US Space Force was stood up following the National Defense Authorization Act for fiscal year 2020, Space Force leaders set clear goals across milestones—to rename all units within 100 days and consolidate acquisition offices into Space Systems Command within 365 days. Doing so allowed them to build momentum and buy-in.
Best practices indicate government leaders can consider three themes when establishing their change sequence:
Generate early wins. Simplifying organizational charts, consolidating duplicative functions, and announcing joint priorities signal immediate action and create clarity for employees and stakeholders. These quick, visible changes help reduce confusion, boost morale, and demonstrate that the integration is moving forward with purpose. They also set the tone for collaboration by focusing the organization on a shared mission from the outset.
Identify long-term investments. Achieving true integration means also tackling the hard tasks that take time, such as harmonizing policies, integrating IT systems, and rightsizing workforce and talent. Investments in new capabilities such as AI, digitalization of data analytics, and service innovation can help the merged entity better adapt to evolving demands. While these efforts take time, they are critical for achieving lasting value and avoiding the inefficiencies of parallel systems or conflicting rules.
Determine the integration journey. Agencies can build a realistic integration road map that aligns with budget cycles, fiscal year constraints, and federal hiring timelines. This road map can break down the transition into manageable phases with clear milestones, enabling leaders to monitor progress and adjust course as needed. As leaders design and launch initiatives in line with milestone goals, they can measure progress against tangible, concrete KPIs and adapt the approach as needed.
Communicate relentlessly
In the 2016 Dell–EMC integration (coined a “merger of equals” despite technically being an acquisition), leadership from both companies prioritized overcommunication as a core integration principle, establishing structured, frequent updates starting well before day one and continuing throughout the transition. A dedicated Value Creation and Integration Office was set up to coordinate cross-functional teams across IT, HR, finance, and operations, with regular reporting rhythms and alignment checkpoints designed to keep employees and stakeholders informed of progress and expectations. Dell executives and integration leaders communicated consistently about strategic priorities—such as preserving EMC’s strengths and customer focus while building shared value as Dell Technologies—ensuring clarity around roles, processes, and future direction. This transparent and relentless communication helped reduce uncertainty, preserve cultural strengths, and maintain momentum toward integration goals as the companies combined into the world’s largest privately controlled tech firm at the time.6
Federal leaders can consider three lessons about communication:
Establish two-way communication. Hosting town halls provides employees with a platform to voice concerns, ask questions, and hear directly from leadership. Publishing frequently asked questions and transition scorecards can further demystify the process, offering employees clarity on progress, priorities, and next steps. These tools not only keep stakeholders informed but also create a shared understanding of the merger’s goals and milestones.
Communicate transparently and frequently. Leaders can communicate regularly and openly, taking the opportunity to set the tone for the merger even before day one. It is particularly important in this moment to address the situation candidly, recognizing that there will be significant disruptions and work ahead. Leaders can avoid using jargon or “spin,” focusing on mission-centric language that reinforces a shared sense of purpose.
Appoint “change champions.” Tagging “change champions” throughout the organization can be powerful. These individuals can act as trusted advocates throughout the transition, helping to cascade key messages, address resistance, and model desired behaviors. By empowering champions with the proper tools and information, organizations can create a network of influencers to help embed change at every level.
While undoubtedly challenging, M&A also comes with unique opportunities. With deliberate planning and a commitment to long-term outcomes, what may initially feel unsettling can become a powerful catalyst for progress and modernization. Federal leaders can build on their own expertise by leveraging a clear playbook that pulls from private sector learnings to set up their organization for a successful, more modern future.
