McKinsey Study Finds 70% of Merger Value Hinges on Operating Model Redesign, Not Deal Structure

McKinsey Study Finds 70% of Merger Value Hinges on Operating Model Redesign, Not Deal Structure

Most M&A integration teams are solving the wrong problem first, according to new research from McKinsey & Company that examined hundreds of corporate mergers over the past decade.

The consulting firm's analysis reveals that roughly 70% of merger value creation comes from how companies redesign their operating models post-close—decisions about organizational structure, governance, and process integration—rather than from the deal terms negotiated during acquisition. Yet most integration playbooks still prioritize IT systems and headcount rationalization over fundamental questions about how the combined entity will actually operate.

"The irony is that CFOs and corp dev teams spend months stress-testing the financial model and negotiating price," the McKinsey report notes, "but then default to bolting the acquired company onto existing structures without rethinking how work actually flows." The result: deals that looked accretive on paper deliver disappointing returns because the operating model creates friction rather than synergy.

The research identifies what McKinsey calls the "operating model design gap"—the period between deal announcement and Day 100 when most companies are still running parallel systems and haven't made hard choices about decision rights, reporting lines, and process ownership. During this window, the study found, value either compounds or erodes rapidly. Companies that front-load operating model decisions in the first 90 days captured 40% more of their projected synergies than those that delayed structural choices.

For finance leaders, this creates a specific challenge: the operating model determines whether finance functions can actually deliver the efficiency gains promised in the deal model. If accounts payable still runs on separate systems with different approval workflows, the "consolidated finance function" exists only on the org chart. If FP&A teams can't access consistent data across legacy entities, the promised "enhanced planning capabilities" remain theoretical.

McKinsey's framework breaks operating model design into five components: organizational structure, governance and decision rights, process architecture, technology and data, and performance management. The research suggests these elements need to be designed in sequence—you can't optimize processes until you've clarified who owns decisions, and you can't build effective performance metrics until you know what processes you're measuring.

The consulting firm examined several case studies where operating model redesign unlocked unexpected value. In one example, a financial services merger initially projected $200 million in cost synergies from consolidating back-office functions. But when the integration team redesigned the operating model to centralize underwriting decisions and create shared service centers, they discovered an additional $150 million in revenue synergies from faster customer onboarding—value that wasn't in the original deal thesis.

The study also highlights common failure modes. The most frequent: creating a "best of both" operating model that tries to preserve elements from each legacy company, resulting in complexity rather than simplification. McKinsey's data shows these hybrid approaches take 60% longer to stabilize and deliver 30% less value than clean-sheet redesigns.

The research arrives as M&A activity shows signs of recovery after a slow 2023-2024 period, with several large deals announced in recent months. For CFOs evaluating acquisitions or leading integration efforts, the implication is clear: the operating model conversation needs to happen during diligence, not after close. The question isn't just "what are we buying?" but "how will we actually run this?"