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From industrial to digital with M&A

In industrial markets, capturing the value of technology acquisitions without smothering the target requires a selective integration approach.

Industrial companies have been acquiring technology businesses at a greater rate than any other industry group for the last five years. While companies are racing to getting these cross-industry deals signed, the real challenge lies ahead in integrating the business. To realize the technology deal’s promise and capture its true value, successful acquirers are throwing out their traditional playbooks and following a select few key principles to avoid smothering the target while unlocking its potential.

In this new KPMG report, From industrial to digital with M&A, we argue that while technology businesses present a potential for out-sized returns, these acquisitions present a different and more complex set of integration challenges than their more traditional within-industry counterparts. These challenges include:

  • Value erosion from lack of focus during integration
  • Steep customer adoption curve
  • Strong commercial network headwinds
  • Unmanaged culture convergence
  • Heightened attrition risk and backfill scarcity

Given these transactions’ unique profile of complexity and risk, savvy acquirers are substituting their traditional integration playbooks with a more fit-for-purpose approach predicated on the following:

  • Integrate selectively to minimize disruption and preserve value
  • Pursue alternative deal structures and partnerships to minimize risk
  • Lean in on revenue synergies to stretch beyond targets
  • Make engineers, salespeople, and culture leaders a priority
  • Expand diligence focus to commercial, software, and product integration

Dive into our thinking:

From industrial to digital with M&A

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Meet our team

Image of Matthew Dintelman
Matthew Dintelman
Principal, Deal Advisory and Strategy, KPMG US
Image of Alex Aschenbroich
Alex Aschenbroich
Director, Deal Advisory & Strategy, KPMG US

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