Unlock Merger and Acquisition Success by Aligning Operations and Technology
Mergers and acquisitions (M&As) and private equity (PE) deals can transform businesses, providing new growth opportunities and competitive advantages. But significant risks can arise during post-merger integrations, particularly when merging operations and technology systems. According to the 2025 M&A Study: A Travelers Special Report, understanding and mitigating these risks before, during and after a merger or acquisition is a key responsibility of risk managers and insurance professionals and essential to the success of these transactions.
To better understand the top risks businesses face from M&As today, Travelers surveyed over 800 risk and insurance professionals for its 2025 M&A Risk Study. The findings highlight key concerns that can impact deal success, from operational and technological efficiency to cultural integration.1
Address the top challenges first: Cultural and operational disparities
Every year, thousands of M&A deals are finalized, highlighting the importance of mastering risk management throughout the journey. In the first three quarters of 2024, over 9,000 M&A deals closed, totaling a staggering $1.2 trillion with an average deal size of $792 million, according to PitchBook.2
This surge in activity underscores a few significant trends in the market. First, private companies in the U.S. backed by PE firms have grown considerably over the last two decades, leading to more than 12 million Americans now working for organizations owned by PE firms.3 PE firms are also holding on to portfolio companies longer. For instance, S&P Global reported that the average holding period for buyouts was 6.1 years in 2024, higher than the average holding period recorded between 2018 and 2022 of 5.8 years.4
A successful M&A deal can unlock operational synergies, improving productivity and efficiency. However, failure to prepare for operational and technological risks in advance can create chaos. The biggest top-of-mind challenges of M&As relate to cultural differences and operational disruptions.
Top challenges:5
- Cultural differences (24%): Tensions arising from differing workplace cultures, slowing team cohesion.
- Operational disruptions (18%): Loss of productivity and efficiency, along with delays in business processes.
- Technology integration challenges (14%): Difficulties in merging software, databases, IT platforms and legacy systems.
- Talent retention concerns (10%): Loss of key employees, talent and institutional knowledge.
By anticipating these challenges, risk professionals that implement risk mitigation plans can help reduce the potential impacts of operational and technological risks.
Merging operations: Align processes and procedures
When companies successfully align operations post-merger, they can achieve greater productivity and efficiency, but failing to anticipate risks can lead to costly disruptions, talent loss and diminished institutional knowledge. Given the high stakes of M&A deals, risk management professionals play a crucial role in mitigating these challenges, ensuring a smoother transition that drives business success.
Key challenges:
- Standardizing business processes, supply chains and customer service models is crucial but difficult.
- Differences in compliance, regulatory and reporting structures can lead to operational bottlenecks.
- Misalignment in workflows and decision-making processes can create inefficiencies and disrupt daily operations.
Opportunities for success:
- Outline clear objectives, timelines and responsibilities for both merging entities to help minimize disruption and enhance operational efficiency.
- Measure integration success by tracking retention, productivity and employee satisfaction, and regularly monitor progress.
- Establish a clear communication plan to help reduce uncertainty and employee misunderstanding of the company’s vision.
Merging technology: Align platforms and security
In addition to achieving economies of scale and driving growth, business systems transformation is an important M&A goal. According to a Travelers study, 21% say the ability to share digital platforms and access or acquire new technology is a top motivation for pursuing a merger or acquisition. Yet the study’s findings reveal that 31% cited operational disruptions or difficulties merging technology as the biggest challenge coming out of an M&A deal.6
Key challenges:
- Standardizing business processes, supply chains and customer service models is crucial but difficult.
- Differences in compliance, regulatory and reporting structures can lead to operational bottlenecks.
- Misalignment in workflows and decision-making processes can create inefficiencies and disrupt daily operations.
- Incompatible software programs, IT infrastructure or technology stacks can lead to operational inefficiencies.
- Issues with data security can negatively impact operations.
- During the integration of IT systems, data security vulnerabilities may increase, exposing systems to potential breaches.
Opportunities for success:
- Find the experts in both organizations. Identify who will be responsible for driving systems integration success.
- Involve key vendors early and partner with third-party technology experts to manage and monitor integration.
- Recognize the importance of cybersecurity. Companies may benefit from investing in additional employee training to ensure a smooth transition and enhance cybersecurity awareness.
- Effective data governance frameworks can help manage vast amounts of information from disparate sources, protect sensitive information and support informed decision-making.
- Effective technology integration requires thorough due diligence, including evaluating the compatibility of IT systems, identifying potential cybersecurity threats and developing a comprehensive integration plan.
Key takeaways for business and risk leaders
Successfully navigating M&A complexities requires business and risk leaders to understand the potential risks and be proactive in implementing strategies to mitigate disruptions before, during and after M&A closing. By leveraging insights from the 2025 M&A Study: A Travelers Special Report, businesses may be better equipped to identify and mitigate potential risks and improve their deals’ potential for success.
Is your organization prepared for the workforce complexities of M&As?
Discover more about key M&A trends and risks.
Contact your Travelers representative to learn how our tailored business insurance solutions can support your company’s smooth transition throughout M&As.
Sources
1, 5, 6 2025 M&A Study: A Travelers Special Report
2 PitchBook Data, Inc., pitchbook.com
3 The Private Equity Stakeholder Project
4 S&P Global
