In specific Bain reported the three primary killers of M&A activity:
1. Ignored potential integration challenges (67%)
2. Over-estimated synergies (66%)
3. Had problems integrating management teams and/or retaining key managers (61%)
The challenges of integration at the new super-agency are driven primarily by the problem that Omnicom owns several major ad agencies, among them BBDO. Publicis owns Riney and a number of other operations under Publicis Worldwide. Many of these agencies will end up battling over common clients. This may give clients more choices and leverage, but it may well cause divisions of the new company to take business from one another. For example, Publicis prides itself on its digital media skills, and so do several Omnicom groups, TBWA Worldwide first among them.
Taken together, the number of units of the two big companies argues for integration to save money. The process will be endlessly complex, given the diversity of the divisions and the fact that several operate in dozens of markets around the world. This sort of consolidation also risks the departure of top managers, particularly those who are the most talented — those the competition wants to raid.
Virtually all major mergers are based on the premise that there are synergies to be had. Perhaps that is where Omnicom and Publicis will shine. But the ability to manage synergies rests to a large extent on integration, which brings the hurdles full circle.
If Bain is right, the merger has little chance of creating the most successful ad agency in the world, even if it is the largest.
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