Managing Partner, Global Co-Lead, Financial Services Consulting
en
Skip to main contentFebruary 04, 2025
More and more, merger-and-acquisition (M&A) practitioners in financial services are recognizing how important intangible assets are to success. While financial metrics still matter, factors like organizational culture, leadership, and human capital are now pivotal to M&A outcomes. This shift highlights a nuanced understanding of value creation and the need for deal teams to focus on these assets.
Korn Ferry surveyed executives and senior M&A leaders from top global financial services firms to explore improvements in due diligence and integration outcomes. The survey revealed that 36% see intangible assets—such as culture, leadership, and intellectual property—as key drivers of M&A activity, signaling a shift in how their value is measured and their impact on long-term success.
Our survey found that deal teams often miss key intangible assets like culture and leadership. In fact, only a third use HR expertise, leading to gaps in evaluating cultural fit, leadership alignment, workforce standing, and organizational readiness. Focusing on the following areas can improve M&A success.
Many deal teams struggle to evaluate intangible assets effectively. Only 35.7% of respondents report integrating HR expertise into due diligence, revealing a significant gap in assessing human and organizational dimensions. This lack of confidence is particularly evident in evaluating cultural fit, leadership alignment, and organizational readiness. Deal teams often focus on traditional due diligence topics, overlooking critical human and organizational factors that impact deal value and integration success.
Survey participants emphasized that evaluating a target's leadership and culture is as crucial as financial assessments. However, cultural assessments are often overlooked, especially by private equity firms. Corporate organizations tend to prioritize cultural integration but struggle with effective execution. The survey highlights that cultural alignment in M&A is as vital as financial due diligence, yet it remains a major challenge for many companies.
Over half (54%) of respondents now prioritize evaluating operating model fit and organizational readiness during due diligence, recognizing their importance for deal viability, value creation, and successful integration. However, HR's involvement is still limited. Including HR professionals in deal teams can offer crucial insights into workforce dynamics, change readiness, and leadership alignment, which are key to identifying integration risks and ensuring smooth post-merger execution.
Our survey shows that workforce analytics are becoming more important in M&A due diligence. Most respondents (77%) value employee engagement scores, and 69% focus on both productivity/performance metrics and turnover rates/employee tenure. These metrics give insights into the target company's workforce, including employee sentiment and organizational culture. This trend matches the improved data quality available to assess an organization’s intangible assets, especially its workforce, which is crucial for post-merger success.
Our survey identified four main challenges in M&A integration: establishing a shared culture, building a strong leadership team, executing timely plans and tracking value effectively, and sharing clear and transparent timelines.
These challenges show the need for thorough due diligence that includes cultural and organizational factors, not just financial metrics. Identifying potential issues early helps mitigate risks and informs decisions about proceeding with the deal. Addressing these factors proactively can lead to better integration planning and outcomes or help avoid problematic transactions.
Our survey highlighted five critical leadership capabilities for successful M&A integration: cultivating trust, managing ambiguity, taking decisive action, engaging collaboratively, and developing strategic vision.
Leaders who excel in these areas are better equipped to guide their organizations through the complex post-merger integration process and align diverse organizational cultures. Companies should prioritize developing and selecting leaders with these competencies to drive M&A success and maximize value creation.
To tackle these challenges and capitalize on opportunities presented by intangible assets in M&A, we recommend the following:
As M&A in financial services evolves, recognizing the importance of intangible assets from due diligence onward is crucial. Expanding frameworks to include cultural, leadership, and organizational assessments can reduce risks, improve integration, and unlock greater value. Balancing tangible and intangible assets will be key to navigating modern M&A complexities and achieving long-term success.
Click the image to download the full report.
To find out how Korn Ferry helps clients maximize M&A value, learn more about our Organization Strategy capabilities.
Stay on top of the latest leadership news with This Week in Leadership—delivered weekly and straight into your inbox.