The trouble with assessing post-deal success

There are a wide range of motivations for taking over another business. You may buy a business because you want to add market share or expand your geographical reach. Perhaps you want to create synergies or achieve cost savings, or quickly double the size of your customer base.

Whatever your reasons for buying a business, your desired outcome is likely to be to add value and make the business more successful than it was before the acquisition. And this applies whether you’ve merged the target business with your existing enterprise, or whether you’re running it as a business in its own right.

So, after you’ve completed an acquisition and you’ve been running your business for a while, how do you measure success? Is it just about turnover and profit, or is there more to it than that? And how can you measure whether you’ve successfully integrated a business with another? Here’s our guide.

Why is measuring M&A success tricky?

Mergers and acquisitions have become a mainstay of the economy over recent decades. Businesses of all sizes continue to seek out growth and diversification through M&A and 2021 doesn't look to be any different in terms of the popularity of dealmaking. Inward M&A in particular, has been booming in 2021, totaling GBP6.1bn in the first quarter of the year, up slightly from the final quarter of 2020. Domestic M&A is a little less active, totalling some GBP3.8bn in the first quarter, according to figures from the Office for National Statistics.

So if M&A continues to be a popular strategy for businesses all over the UK, what’s the driving force behind this? This isn’t easy to answer, as M&A success is measured in many different ways. For example, if you were to measure the success of a deal in terms of financial performance, you may get a positive result showing that a business has increased its profit since a takeover. However, that same business may have seen its sales fall, or shareholder confidence take a bash. It may have lost key employees or return on investment may be less than the new owner was hoping for.

Then there’s the issue of timescale. How long after an acquisition deal is the right time for success to be measured? Is long term success more important than short-term success and how quickly should improvements be achieved?

It’s also difficult to measure performance of the target business post-deal as a separate entity to a business it may have been merged with. Should it be considered as a separate business, or as a new, merged business? Did the dealmakers undertake the merger knowing that the first few years would be a struggle, or would the target business always operate as a separate enterprise? All of these factors muddy the waters when it comes to measuring the performance of an M&A deal.

Key ways to accurately measure deal success

With so many different types of deal taking place and so many different ways to measure performance of a business post-deal, measuring post-deal success can seem like an impossible task. However, there are a few ways to ensure you can measure deal success as accurately as possible.

1. Use metrics that reflect the reasons behind the takeover
If you are buying a business to extend your reach or gain new customers, the success of your deal should be measured on these precise metrics. If you were focused on diversification, has the takeover allowed you to achieve this? On the other hand, if you are all about creating synergies or maximising cost saving, measuring sales might not provide you with the insight you need into the success of the deal.

Ultimately, the success of a deal can only be judged when the purpose of the acquisition is clear. Successful deals tend to be those with a clear purpose, where the acquiring business can benefit the target business and its customers, as well as the other way around.

2. Don’t overlook the importance of integration
When you’re analysing the success of a merger deal, it’s vital that you take your integration into account.

- What are the key factors of a successful integration?
- Achieving synergies
- Integration in an ambitious timeframe
- Managing culture and change
- Strong project governance

3. Don’t measure success too early
Although lasting and effective integration tends to happen quite quickly after a deal takes place, observing sales increases, profit increases and even greater synergies may take some time. Judging a deal on the results immediately following an acquisition could be a mistake - give your strategy time to bed in. Actual return on investment might only be clear several years down the line and might not be as clear as you may hope.

If, for example, you have launched a new product that becomes a best-seller, as a result of innovation made possible by an acquisition several years before, the success of that merger is difficult to measure right away.

4. Look at the following key metrics
There are a number of other key factors to measure to check how your integration is going following a merger or acquisition. Here are a few key metrics to monitor, but you will want to choose ones that reflect the way you measured success previous to the merger so that you can effectively compare.

- Your revenue
This is an obvious place to start. Has the acquisition actually made you money? Make sure you monitor revenue across the business as a while, but also within the most affected units of your business. Revenue per client is also a great measure of deal success because being able to attract more valuable customers is a great win.
- Number of customers/clients
Buying a business is often all about adding new customers and measuring this metric will give you an important insight into the success of your deal. You may lose some customers or clients because of an acquisition, but you want the balance to be swinging the right way before long.
- Cash flow
Are you able to access cash more easily as a result of your deal?
- Ability to cross-sell
Being able to sell your products and services across your client base is a valuable gain from any deal.
- Staff turnover
If a deal has led to higher staff turnover more needs to be done to try to improve integration from a culture and staff morale point of view.



When a business owner takes over another business that is expected to fit seamlessly into its current operation, expectations can be extremely high. For example, North West based Souter PR has recently been taken over by South-East based Jargon, a rival PR agency with a very different geographical reach. Jargon says it is taking over the Cheadle-based agency in order to expand geographically, following the government’s ‘levelling up’ agenda, which is intended to drive investment and growth in the North of England.


Reports state that the combined agency will have fees totaling some GBP2mn, and Jargon’s CEO, Simon Corbett, stated: "Manchester was recently named the fastest-growing tech hub in Europe. Today’s acquisition will place the Jargon PR team at the heart of this incredible community, aligning the agency with the UK Government’s ‘levelling up agenda’ that continues to drive growth, investment and innovation across the region.”


Jargon is keeping the entire team at Souter on, and Souter founder, Sue Souter, will become the new combined agency’s Associate Director. The success of this takeover project will have to be measured against the expectations. The investment may well pay off if the government’s levelling up scheme comes together and has a major impact on investment into the North West. However, if it falls flat in the wake of COVID and Brexit, the impact of the investment may be underwhelming for the Jargon team.


Another business that’s confidently continuing to acquire rivals despite the difficulties in measuring past-deal success is wealth manager Kingwood Holdings. The business has recently announced the purchase of Admiral Wealth Management for a deal worth GBP4mn.


This latest acquisition follows several others that took place last year at enormous expense to the business. It’s results to the end of 2020 showed the impact of the acquisitions with operating profit for the year coming in at just £900k. The business said making performance comparisons with 2019 was “difficult” as a result of the acquisitions of Regency Investment and Sterling Trust. Investing so heavily and confidently in growth through acquisition at such an uncertain time is a brave move.


Kingwood is funding the acquisitions with the £80m in investment it attracted from Pollen Street Capital at the end of 2019. However, the success of these deals will come down to a range of factors, not least the reasons behind the deals themselves. And then whether these initial intentions are fulfilled later down the line.

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