One of four rationales, or a combination of them, are often quoted for M&A transactions:

• Know-how transfer:[5] Smaller organisations are often bought to stimulate the buying company with, for example, expertise, patents or technology.
• Synergies:[6] Organisations merge to realise synergies. Cost savings are realised, for example, due to economies of scale, portfolio effects, or joint product/service offerings.
• Growth:[7] Relatively large and mature organisations, in particular, use acquisitions to achieve non-organic growth. For example, to enter new markets (e.g., Daimler and Chrysler) or to introduce new products (e.g., Microsoft and Nokia).
• Competition:[8] Acquisitions could also be used to neutralise new or long-established competitors in a market segment or industry. This trend is often observable in industries in a consolidation stage.

A change of ownership, regardless of the motive, is often followed by significant change in the structure, culture, processes or IT systems of an organisation.

During these change processes, long-standing structures are often disrupted, IT systems exchanged, employees transferred or dismissed, and locations closed. The development of a new, joint culture within an effective corporate structure is one of the greatest challenges following a merger.[9]

In an ideal case, a post-merger integration (PMI) process[10] should address these challenges and ensure the achievement of the merger’s initial objectives. 

In reality, about half of all M&A transactions fail to meet the initial strategic and financial goals.[11] 

The list of reasons is long – incorrect pricing, legal obstacles, hidden risks, cultural shocks and so on – but the most common reasons for the failure of a successful business transaction are poor integration (e.g. processes, systems), high complexity, failure to develop a common culture or insufficient synergies.[12]

Digital communication can support cultural integration – knowledge management, user-friendly collaboration tools, IT-based communities and much more can be helpful.

It is also advantageous if companies set up transparent structures and processes that can be quickly and efficiently coupled with other structures. Digitalisation can make a valuable contribution to increasing M&A success rates. For example, a service-oriented mindset and common service centres with standardised interfaces are means to support this. Redundant services can be quickly and effectively identified in the PMI process and distinguished from other company parts. Consolidation measures can be undertaken without significantly hindering daily operations. The acquired business, however, can be relatively easily integrated once transparent and standardised interfaces to the acquiring organisation have been built. Furthermore, flexible IT structures are a key success factor for any service-oriented organisation to integrate new elements quickly and transparently.[13]

IT systems are an integral part of modern enterprises. It is therefore not surprising that 50–60% of the initiatives to realise synergies in the PMI process are based on measures to consolidate IT.[14] This challenge is significantly easier in digitalised companies. Drivers of IT-related savings are often reduced IT infrastructure costs, reductions in IT support staff and procurement savings.

In addition, synergies may be achieved from integrating IT functionalities to simplify financial, human resources or logistics processes, and from exploiting joint or merged data on customers and suppliers.

Oracle, for example, specifically designed its own enterprise resource planning (ERP) system in order to integrate new business components rapidly and effectively. In this way, Oracle was able to successfully integrate about 50 acquisitions into a unified ERP system between 2005 and 2009.[15]