Part 2 of a four-part series on integration, value destruction, AI, and leadership
(You can read the related articles at the end of this post)
In the first blog of this series, I explained why I have been spending time with firms and teams several years after their acquisitions, particularly organisations we have worked with from technology due diligence through to post-merger integration.
One benefit of long-term relationships with acquirers is the ability to revisit deals long after integration has officially finished. Not a Day 100 review. Not a retrospective deck. But a genuine post-mortem of post-mergers, once the organisation has settled and the outcome is no longer theoretical.
Across conversations with multiple acquired businesses, some five to ten years post-deal, a clear and consistent pattern emerged.
When integration works, everyone knows it.
When it doesn’t, the damage compounds quietly.
The most striking insight is where value destruction is now happening.
Increasingly, it is not weak or immature businesses that struggle post-acquisition, but well-run, well-automated targets that are absorbed into slower, more fragmented enterprise environments.
When the “holy grail” actually works
It is important to be clear that integration can still be genuinely transformational.
In immature or under-resourced businesses, the corporate overlay often delivers real uplift:
- Robust accounting and reporting
- Marketing and sales infrastructure that did not previously exist
- Additional operational support and headcount
- Clearer career progression and role definition
In these cases, the target business feels supported rather than constrained.
Morale improves.
The “them and us” disappears.
People grow with the platform.
This is integration nirvana, and it still exists.
The emerging failure mode: regression, not progress
A very different story is playing out, however, in more digitally mature acquisitions.
In multiple post-acquisition interviews, teams described the same regression:
- Marketing functions that previously ran on four to five hours a week of automated workflows now require twenty to forty hours, often with additional hires
- Forecasting accuracy drops after migrating onto enterprise finance platforms
- Decision-making slows as data becomes fragmented across legacy target systems and corporate tools
- Automation is replaced by meetings, emails, and manual reconciliation
The irony is difficult to ignore.
The more operationally advanced the target was pre-acquisition, the more likely it is to be slowed down by integration.
This form of value destruction is rarely dramatic. Revenue does not collapse. Customers do not immediately leave. Instead, speed erodes, effort increases, and morale declines slowly over time.
Why this happens and why it is not “just systems”
Three structural causes show up again and again.
1. Shallow discovery of the target’s operating model
Acquirers are generally diligent about documenting systems. What is far less common is a deep understanding of how work actually gets done.
In many of these businesses, automation removed entire layers of coordination. Insight was generated inside tools that never appeared material during diligence.
Once those systems were displaced or duplicated, efficiency vanished.
The systems were understood.
The operating model was not.
2. Enterprise systems optimise for control, not granularity
Enterprise platforms are designed to prioritise consistency, governance, and auditability. That is entirely rational at scale.
The unintended consequence is that targets often lose the forecasting detail and operational visibility they previously relied on to move quickly.
When that happens, automation is replaced by communication.
Meetings replace dashboards.
Reconciliation replaces insight.
Everything is compliant.
Very little is efficient.
3. Integration design is deferred, not designed
In many deals, integration design is nobody’s explicit responsibility.
Corp dev teams close the deal.
PMI teams inherit constraints.
Functional leaders default to standardisation.
No one truly designs the future operating model.
This is not a tooling problem.
It is an ownership problem.
The hidden cost: morale and identity
The technical issues are visible.
The cultural impact is slower and more damaging.
When integration works:
- The target integrates socially and operationally
- Staff see real career acceleration
- Identity shifts from “acquired” to “part of”
When it fails:
- “Them and us” becomes entrenched
- High performers disengage or quietly leave
- The organisation never truly integrates, it merely coexists
At that point, value destruction is no longer reversible.
This aligns closely with long-standing research from McKinsey & Company, which consistently shows that a majority of M&A transactions underperform due to integration execution issues rather than flawed strategic rationale. McKinsey’s work highlights organisational friction, operating model disruption, and cultural misalignment as primary drivers of post-close value leakage.
Harvard Business Review has similarly documented that acquirers routinely underestimate the disruption caused by changes to everyday workflows, even when headline systems appear familiar.
Three fixes corp dev must own in 2026
Across the integrations that worked, three corrective actions appear consistently.
1. Deep operational discovery, not system inventories
Discovery must go beyond what systems exist to how value is actually created:
- Where automation genuinely saves time
- Which tools enable speed and insight
- What would break if removed
This work belongs before integration planning, not during remediation.
2. Design the future operating model at deal time
Integration is not about replacing systems.
It is about deliberately designing:
- How decisions are made
- Where data lives
- Which capabilities are preserved, scaled, or retired
This cannot be fully delegated to PMI.
Corp dev must co-own the design.
3. Protect speed as a first-class integration metric
Most integrations track cost, risk, and compliance.
Very few track:
- Time to decision
- Planning cycle length
- Automation coverage
If speed is not measured, it will be lost.
The takeaway for 2026
The next wave of value destruction will not come from bad deals.
It will come from good deals integrated without intent.
As we move towards 2026, the most effective corp dev teams will be those that treat integration design as strategically as valuation and accept that standardisation is not the same as optimisation.
In the next blog in this series, I will look at artificial intelligence, and why AI is accelerating both integration risk and value destruction in ways many acquirers are not yet prepared for.
