McKinsey Study Finds 70% of M&A Deals Fail to Capture Full Value Due to Operating Model Neglect

McKinsey Study Finds 70% of M&A Deals Fail to Capture Full Value Due to Operating Model Neglect

Most corporate mergers leave significant value on the table because executives treat operating model design as an afterthought rather than a strategic priority, according to new research from McKinsey & Company published this week.

The consulting firm's analysis reveals that roughly 70% of mergers and acquisitions fail to achieve their anticipated synergies, with poorly designed operating models emerging as a primary culprit. The finding arrives as finance chiefs navigate an increasingly complex M&A environment where integration execution—not just deal pricing—determines whether transactions create or destroy shareholder value.

McKinsey's research identifies a critical gap in how companies approach post-merger integration. While dealmakers typically focus intensely on financial modeling and synergy targets during due diligence, they often defer fundamental questions about how the combined entity will actually operate until after the deal closes. By that point, according to the firm's consultants, organizational momentum and political dynamics make it significantly harder to implement optimal structures.

The operating model encompasses decisions about organizational structure, governance mechanisms, process ownership, technology systems, and decision rights—essentially the blueprint for how a merged company will function day-to-day. McKinsey argues these elements directly determine whether finance organizations can consolidate systems, eliminate redundant roles, and capture the cost synergies that justified the acquisition premium.

The research highlights several common failure patterns. Companies frequently create hybrid structures that preserve legacy fiefdoms rather than redesigning workflows around the combined entity's needs. They underestimate the complexity of integrating financial systems and reporting processes, leading to prolonged periods where finance teams manually reconcile data across platforms. And they fail to clarify decision rights, leaving controllers and FP&A leaders uncertain about approval authorities and escalation paths.

McKinsey recommends that CFOs and corporate development teams begin operating model design during the due diligence phase, before deal terms are finalized. This approach allows buyers to pressure-test whether their synergy assumptions are operationally feasible and to identify integration risks that might affect valuation. The firm suggests creating detailed "Day One" blueprints that specify reporting lines, system integration timelines, and process ownership for critical finance functions.

The research also emphasizes the importance of making explicit choices rather than defaulting to compromise structures. McKinsey notes that merged companies often try to accommodate both legacy operating models, creating complexity that negates potential efficiencies. Instead, the firm advocates for clear decisions about which systems, processes, and organizational structures will prevail—even when those choices create short-term disruption.

For finance leaders, the implications are straightforward: the operating model isn't a post-close implementation detail but a strategic variable that should inform deal pricing and structure. A merger that looks attractive on paper can destroy value if the combined finance organization lacks a coherent blueprint for how it will actually operate.

The question McKinsey leaves unanswered is whether boards and executive teams will prioritize operating model design when deal momentum and competitive pressures push toward faster closings. The data suggests they should—but whether they will remains an open question as M&A activity continues.