Maximize synergy value through integrated M&A in financial services

Financial services firms have long relied on mergers and acquisitions (M&A) as a steady avenue for strategic growth, but achieving value through M&As is complex. Acquiring assets without understanding their value can lead to costly mistakes. To create sustainable value from M&As, these firms must adopt an integrated end-to-end approach.

Some of the best practices for an integrated M&A approach are seen in LTIMindtree’s support for M&A activities in the financial services industry, spanning the entire M&A value chain (see Exhibit 1). This note explores real-life examples of credit agency and bank-to-bank mergers to demonstrate the value of an integrated M&A approach by deal types and how tailored synergies can be created.

Exhibit 1: An integrated approach effectively prevents synergy leakage across the entire M&A value chain

Source: LTIMindtree and HFS Research, 2024

Adopt an integrated approach to due diligence to avoid synergy leakage

Managing data is challenging even in the best of times—let alone when integrating multiple acquisitions of data firms. For a large North American consumer credit rating agency, merging with well-matched data platforms and unlocking access to unique data sets required LTIMindtree to provide 360-degree due diligence. This involved thoroughly evaluating the target companies’ technology, data security, and compliance aspects before recommending the ideal acquisition.

However, it doesn’t stop there. The focus wasn’t merely on securing a quick close—but on ensuring that due diligence complements the post-merger integration plans. This necessitated establishing a robust governance model and an integrated strategy that aligned closely with the core business while also helping the agency unlock one or more constraints (such as access to unique data sets on criminal background, underbanked and unbanked individuals, and fraud prevention data on its business) and find new sources of synergetic value.

Effectively bridge strategic intent with operational reality

LTIMindtree successfully bridged the strategic intent with operational reality without disrupting the agency’s business. It seamlessly integrated terabytes of data from numerous sources into the centralized data fabric of the credit agency, democratizing access to 4 billion transactions, 119 million consumers, and more than 700 active contributors. The primary task was to harmonize data by combining varying data systems, platforms, and formats from the merging entities, ensuring compatibility and adherence to data privacy and security regulations. Significant automation was introduced into the workflow, enabling faster access to data within the agency ecosystem. The net result of all these activities was the credit agency gained access to unique data sets, allowing it to offer more robust credit profiles and financial services.

Gain scale through carefully planned integration of multiple acquisitions

Consider the M&A activities of a North American bank that rose to become one of the country’s largest banks by assets after more than 20 acquisitions. LTIMindtree has been involved in the integration efforts since the early acquisitions. The integrations of the acquired banks into the parent bank were ambitious in scope and profile. LTIMindtree was responsible for the several acquisition integrations, rationalization, and consolidation of programs, processes, data, applications, enterprise resource planning (ERP) systems (using ServiceNow), and technology stacks, absorbing them into the parents’ structure and post-integration application and maintenance support.

The amalgamation lever included setting up a robust compliance and treasury framework, a powerful data validation engine, and extensive automation. The parent bank set clearly defined stretch aspirations in financial and operational terms. LTIMindtree met these objectives, achieving 30% faster migration of data and applications to the cloud and a 40% reduction in post-migration issues through automation.

The Bottom Line: Financial services enterprises must execute a thoughtful, end-to-end integration of M&As to realize the full value. LTIMindtree has demonstrated an integrated approach through use cases, combining due diligence, strategy, execution, and value delivery to maximize the potential value creation of M&A deals.

Make no mistake, mergers are challenging. These two case studies highlight the distinct types of deals: one aimed at rapidly acquiring technologies and capabilities, specifically data and data platforms, and the other at building scale by merging smaller banks into a larger superior banking entity. In both cases, LTIMindtree’s integrated approach showcases how enterprises can maximize the value of mergers by institutionalizing due diligence, strategy, and execution muscle.