Q&A: Strategies for maximising value in complex transactions

May 2025  |  SPECIAL REPORT: MERGERS & ACQUISITIONS

Financier Worldwide Magazine

May 2025 Issue

FW discusses strategies for maximising value in complex transactions with Nicola Longfield, Hannah Twist, John Moth, Francesca Scott and Gareth Jones at KPMG in the UK.

FW: In today’s deal market, what strategies are companies using to increase the likelihood of a successful M&A outcome? To what extent have you seen a change in how businesses approach an acquisition or divestment, or what they expect to see in the process?

Longfield: In today’s deals market, buyers are looking to gain a robust understanding of a target much earlier than any official process may launch, enabling early understanding of the key strategic questions to answer and a hypothesis of how value will be created post deal under new ownership. Any subsequent process can then be used in a focused way, addressing targeted areas that are fundamental to understand. The range of focus has evolved too, with value creation strategies key to success. Due diligence focuses on mitigating risks, as was always the case, but also very importantly on identifying where value can be captured across a breadth of areas including financial, commercial, tax, technology, cyber, pricing, people and culture, and with a different focus depending on the relevant sector. For a divestment, a seller needs to know it is providing robust, unbiased information with sufficient detail to enable a buyer to assess the whole range of value-creation areas. This includes very granular data underpinning historical information but also underpinning a realistic business plan. For a non-core divestment, many companies now see this as a way to optimise their portfolios and identify non-core assets through regular portfolio reviews, instead of waiting for potential deterioration of results to make a decision to sell. This approach recognises value for both the seller and the buyer. Clearly defined financials and separation plans enable a buyer to gain confidence on how a non-core asset could stand alone or potentially integrate into a buyer’s existing business, which can help derisk a process and ensure value is not lost through uncertainty.

“Chief executives tell us that culture and people issues are one of the top reasons why deals fail to deliver value.”
— Gareth Jones

FW: When creating synergies forms part of the deal rationale, how should this be approached at the outset? How can businesses ensure they assess this aspect throughout – and then track and capture the benefits?

Scott: If synergies are a stated part of the deal rationale, then they must be considered at the start of any M&A process. The synergy case will evolve as access improves and more information becomes available. Factors to consider when assessing synergy potential include deal type, industry and target operating model and the assessment should be anchored to the acquirer’s deal rationale and integration strategy. It is critical that internal stakeholders align on the vision for the integrated business from the outset, including operational and functional management. This ensures the synergy case reflects operational intentions and limitations, rather than being purely mathematical. Then ensuring a robust financial baseline to work from is key. As the transaction progresses, ensuring a seamless handover to integration teams is crucial. Integration planning needs to reflect the synergy case, and an effective governance framework. Key performance indicators (KPIs), reporting criteria and benefits tracking tools should then be used to monitor and capture the value identified in the original case. We advise clients to consider a range of potential synergy benefits to reflect different integration principles and provide contingency. Then there must be an assessment of the one-off costs required to deliver synergies and integration, and alignment of the synergy assumptions with high-level integration milestones.

“It is critical that internal stakeholders align on the vision for the integrated business from the outset.”
— Francesca Scott

FW: What shifts are you seeing in the approach or focus of due diligence? What role does this play in ensuring maximum value can be created from a transaction?

Moth: The first point to note is buyers are undertaking work at a much earlier stage in the process. Commercial and market diligence can often be undertaken a year or more in advance to give a confident baseline from which to proceed, and give greater context and focus to subsequent due diligence areas. The second would be an increasing need for robust, holistic and integrated due diligence across all relevant functional areas. For example, in a recent acquisition, human resources and technology due diligence, integrated with the financial workstream, aligned the target’s buying expertise with the robustness of its technology stack, with the intention of running part of the business on a standalone basis. Third, there is a trend toward the provision of greater quantities of sell-side materials earlier, although there is also evidence of this being overly seller-friendly. Buyers typically will not proceed without robust evidence, so this requires focus to get to what is required in tight timetables alongside the robust, critical and holistic eye a good adviser will bring. Together, early insight, a holistic approach and robust, detailed due diligence all help to ensure maximum value can be created from a transaction.

“Commercial and market diligence can often be undertaken a year or more in advance to give a confident baseline from which to proceed.”
— John Moth

FW: In what ways can technology, such as artificial intelligence (AI) and data analytics tools, help companies in the deal process itself, and in achieving the desired value-creation outcomes?

Moth: Artificial intelligence (AI) and data analytics are quickly evolving how companies approach the deal process, testing hypotheses and identifying value. With large volumes of data now commonplace, AI and analytics tools enable rapid analysis and interpretation of complex datasets, providing the evidence to support investment cases and identifying upsides. As AI becomes more broadly incorporated into both the deal process and assessment of value creation options, it provides both significant efficiency benefits but also breadth, highlighting previously unidentified strategies which can give acquirers competitive advantage. While the benefits are significant, AI also introduces new risks like data privacy concerns, overreliance on algorithmic predictions and biases in AI models. Companies and their advisers must balance these benefits with potential risks and mitigate these with human judgement to ensure successful deal and value creation outcomes.

“Financial metrics will always be important but intangibles can, in some cases, define the full potential of a deal.”
— Hannah Twist

FW: What should businesses focus on when it comes to managing cultural and organisational alignment in a transaction? What are the consequences of failing to address this aspect?

Jones: Chief executives tell us that culture and people issues are one of the top reasons why deals fail to deliver value. Getting it wrong can have significant impacts on the ability of a seller to achieve a higher price point, or the buyer to deliver on its post-deal strategy. For example, three out of five managers will typically leave within the first three years of deal close, eroding talent pipelines and organisational memory. How to get the right people strategy is a key concern of dealmakers, and we are seeing an increasing focus from buyers and sellers to proactively look at people and culture challenges early in the transaction cycle. Dealmakers are being bolder in culture assimilation, explicitly calling out and making tactical plans for cultural differences, focusing on helping employees say goodbye to yesterday and hello to tomorrow. We are also seeing bolder action on upfront alignment of organisational structures and ways of working, with people synergies and transformation now hitting in year one post transaction, rather than waiting until 12 months post closure. Transact and transform are now going hand in hand, with people at the heart of transaction strategies and value cases.

FW: To what extent should value-creation strategies be tailored to address unique challenges and opportunities within different sectors?

Longfield: Each sector and often subsector has very specific market dynamics and attributes, so it is key to tailor the approach to a deal and identify value creation strategies to the subsector that the asset is in. Routes to market, operating models, data availability and KPIs, to name a few, are typically specific to that subsector and need to be benchmarked and considered against peers in the sector. Deal advisers are typically sector experts and have experience with other businesses in the same sectors to draw upon.

“Due diligence focuses on mitigating risks, as was always the case, but also very importantly on identifying where value can be captured across a breadth of areas.”
— Nicola Longfield

FW: Looking ahead, how do you expect the focus on value creation to evolve?

Twist: There are a number of trends I see continuing to evolve. Firstly, the role that technology, data and analytics plays. Secondly, the timing of when businesses or investors are looking at evidence behind value-creation assumptions. Thirdly, the breadth of areas being assessed as part of a deal. When it comes to the tech and data side, this will not only impact how diligence and value assessments are undertaken, but the speed at which there is now the ability to provide comparative assessments or sensitivities to challenge and test value-creation assumptions. This efficiency is also enabling companies to identify the value creation opportunities in their own business as part of a sale process, without delaying a process. Companies preparing for the sale of a business need to consider much earlier in the process what the potential of the business ‘could’ be and not just look at how things are currently. On timing, we are seeing more done earlier in a process, which then accelerates the realisation of value once a transaction has completed. Finally, the breadth of what is being considered continues to grow as it becomes easier to assess more factors, thanks to wider availability of information and time taken to run analysis. Technology, cyber and data are all areas that businesses are now looking at assessing to a far greater level. Additionally, it is often harder to measure intangible factors such as culture, sentiment, market perception and societal impact, all of which are essential in shaping a transaction. So, we expect to see continued breadth in the assessment of these areas. Financial metrics will always be important but intangibles can, in some cases, define the full potential of a deal.

 

Nicola Longfield leads the UK deal advisory business and is a consumer deals partner with over 20 years of professional experience, almost exclusively in advising a range of corporate and private equity clients on M&A transactions. She has focused on consumer deals, leading some of the most high-profile international deals in the sector, including Mars, Froneri, Tate & Lyle, ABF, Diageo, Evergreen and Jimmy Choo. She can be contacted on +44 (0)7970 921 995 or by email: nicola.longfield@kpmg.co.uk.

Hannah Twist is a partner and head of the strategy group for KPMG in the UK and EMA. She is a transactions specialist with over 20 years’ experience of advising clients on how to protect and deliver maximum value from a merger, acquisition, joint venture or divestment. She has advised many corporate and private equity clients on some of the largest and most complex deals across several sectors and across most geographies. She can be contacted on +44 (0)7989 502 418 or by email: hannah.twist@kpmg.co.uk.

John Moth leads the transaction advisory services business in the UK having worked across the mid-market, large corporate and private equity businesses, and has extensive expertise in consumer and business services. He has also worked to evolve KPMG’s UK practice, leading the sale of its pensions and restructuring practices and establishing its DealTech function. He can be contacted on +44 (0)7740 951 082 or by email: john.moth@kpmg.co.uk.

Francesca Scott is a partner with KPMG in the UK’s deal advisory deal execution team and is head of the firm’s synergies offering. She has over 18 years’ experience providing deal-related support to clients across a wide range of sectors, at all stages of the deal lifecycle, on both the buy- and sell-side, including bid-defence, with a focus on delivering synergies and synergies-related engagements on over 200 transactions, several of which have set market precedents. She can be contacted on +44 (0)7880 054 682 or by email: francesca.scott@kpmg.co.uk.

Gareth Jones is an experienced HR professional. Working with organisations, he helps them deliver the people agenda on integrations, separations, M&A, joint ventures and large scale change programmes. He has experience of working across industries and sectors, and has also held senior roles in consulting and in-house HR teams. He can be contacted on +44 (0)7919 544 467 or by email: gareth.jones@kpmg.co.uk.

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