8 Ways Shared Services add Value in Mergers & Acquisitions

Organizations that have well developed Shared Services operations are in a unique position to realise accelerated savings in mergers and acquisitions
By: Paul Hawkins, Managing Director, MergeCo,


Discover eight key contributions that Shared Services can make to your next corporate deal.

Metrics for synergy identification
In building a business case for shared services, organisations frequently draw on transactional efficiency benchmarks e.g. invoices processed per full time equivalent (FTE) to derive a comparative cost per transaction. The process of comparing efficiency in one’s own organisation to others that have deployed shared services has provided many compelling cases for change over the years.
In a merger or acquisition, comparing these metrics across the merging parties can quickly identify potential areas that are ripe for cost reduction synergies. Application of shared services cost benchmarks to the incremental transaction volumes will often point the way to substantial savings.

A credible ‘best of both’ approach
An added benefit of this internal benchmarking, especially in a ‘merger of equals’ is that it creates a fair and transparent basis for selection of internal best practices across the two organisations. An Australian company in the financial services sector (online share trading) engaged operational leaders from both organisations to develop and share comparative metrics.
Salient differences in performance measures highlighted areas requiring more detailed comparative analysis and created transparency around how and why one organization’s practices came to be considered more efficient. The transparency of this approach also did much to neutralize political maneuvering and rhetoric that influences decision making in these situations and resulted in a deep appreciation of why one process or structure outperforms another.

Under a ‘best of both’ scenario it becomes quite possible that the acquired/smaller organisation will have its processes adopted in preference to those of the acquiring/larger organisation in certain instances. It is a Darwinian selection process which ensures that the fittest processes survive.
Impartial selection and implementation of the best solution builds belief in a ‘best of both’ culture which recognises and acknowledges the relative strengths and contributions of both organisations.

Accelerated de-duplication (and other cost synergies)
An efficient shared services organisation should provide a natural consolidation point for duplicated Finance, IT, Administrative, Procurement, HR, Programme/Project Management, Legal, Customer Service and other functions. Detailed documentation and process mapping of the current activities, accompanied by shadowing and reverse-shadowing interchange between the shared services and incumbent staff can result in rapid learning and job knowledge transfer. Absorption of common functions into the shared services centre can occur within a few months of completing the transaction. This is in stark contrast to de-duplication timeframes for organisations that have no precedent or shared services capability, who will typically take far longer to complete this process effectively. Rationalisation of support functions can be accompanied in parallel by reduction in overhead costs e.g. property leases and sales of any other extraneous assets.

Accelerated revenue synergies
Where an organisation has developed shared front office capability in the form of customer service and/or /sales call centers, rapid re-training can be used to accelerate revenue synergies through product support and cross-selling. Call centre staff in shared call centers are used to dealing with a wide range of products and