Issued April 30, 2025 at program close. This is not a case for whether to do the transaction — that was decided and priced at $1,200,000,000 before this program existed. It is the case for what the integration itself returned: $85,000,000 of run-rate synergy against $59,400,000 spent to capture it. It does not resolve cleanly, and the section that matters most is the one where it doesn't.
Contents
1. What this analysis is, and what it is not
A conventional cost-benefit analysis asks whether a discretionary investment should proceed. Nothing in this program was discretionary in that sense: the acquisition was signed before the integration was chartered, and the money committed to buying the company dwarfs the money committed to integrating it. Refusing to integrate was never an option on the table.
What was genuinely at stake is narrower and more useful: the deal model promised $85,000,000 of annual run-rate synergy by Year 3, and that promise is the integration program's to keep. This analysis measures what was delivered against what it cost to deliver.
The distinction changes which number is the answer. Against the transaction, a $59,400,000 program is roughly five percent of the purchase price and any positive synergy justifies it — a test so easy it measures nothing. Against the synergy commitment, the program either produced $85,000,000 of recurring benefit or it did not, and the cost of capture is a real comparison. The second framing is the only one that can fail, which is why it is the one used here.
2. The cost side
| Basis | Amount | Note |
|---|---|---|
| Pre-close deal model (Class 5) | $52,500,000 | Estimated under a legal bar on examining member data |
| Post-close authorization (Class 2) | $60,144,000 | The first estimate built from evidence |
| Actual integration spend | $59,400,000 | $744,000 returned against authorization |
| Variance against the deal model | +$11,100,000 | Explained in the Closeout Report and the Change Control Log |
The cost side carries one honest complication. The figure a reader instinctively compares against is the deal model's $52,500,000, because that is what the transaction was approved on — and against that number the program spent $11,100,000 more. That comparison is fair to make and misleading to stop at: the deal model was a Class 5 estimate made while antitrust law barred anyone from examining the member-level data the largest workstream depends on. The post-close re-baseline was the first credible number, and against it the program finished inside authorization.
3. The benefit side — run-rate by source
| Synergy source | Year 3 target | Achieved | % |
|---|---|---|---|
| Platform & IT consolidation | $24,000,000 | $21,120,000 | 88% |
| Provider network rationalization | $19,000,000 | $11,970,000 | 63% |
| Vendor & contract consolidation | $18,000,000 | $18,000,000 | 100% |
| Corporate function consolidation | $16,000,000 | $15,040,000 | 94% |
| Facilities & other | $8,000,000 | $7,200,000 | 90% |
| Run-rate | $85,000,000 | $73,330,000 | 86% |
Run-rate at close of the transaction was $68,400,000; it stands at $73,330,000 at program close and is forecast to reach the full $85,000,000 in Year 3. On the measure the deal case was written in, the commitment is met.
The order of that table is itself a finding. Vendor and contract consolidation completed first and in full, because it is contract work — change-of-control clauses, terminations, renegotiations — and lands in months while the technical tracks are still planning. Provider network is furthest behind, and not because the workstream underperformed: it is gated by contract anniversaries nobody controls. Reading down that column tells a future program which synergies it can accelerate and which it can only wait for, which is a more useful planning input than the percentages.
4. Where the case stops being clean
Everything above supports a favorable conclusion. The next table does not, and both are true simultaneously.
| Period | Deal model, cumulative | Actual, cumulative | Variance |
|---|---|---|---|
| Year 1 | $22,000,000 | $19,400,000 | −$2,600,000 |
| Year 2 | $58,000,000 | $47,600,000 | −$10,400,000 |
| Year 3 | $121,000,000 | $106,800,000 | −$14,200,000 |
The Year 3 target is met and cumulative capture finishes $14,200,000 behind it. Neither statement corrects the other. The mechanism is simple and worth stating plainly: a synergy delivered late catches up on run-rate, because the curve shifts right — but it never rises above target to compensate for the months it was absent. Three months of duplicate running cost under the extended transitional services were paid and are not recoverable at any future performance. A cost-benefit analysis that reported only the run-rate would show this program hitting its deal case exactly, and would be silent about $14,200,000 of benefit that no future period returns. Both numbers appear here for that reason, and the shortfall is not netted against the achievement.
The cause is not a delivery failure. The extension that produced it was bought deliberately to protect member data integrity when the identity workload proved larger than any lawful pre-close estimate could have known. The program spent cumulative synergy to protect data integrity, and that was the correct trade under the charter's constraint order — but it was a real cost and it is recorded as one.
5. Three-year position
| Line | Amount |
|---|---|
| Cumulative synergy captured through Year 3 | $106,800,000 |
| Integration spend | −$59,400,000 |
| Net three-year position | $47,400,000 |
| Benefit-to-cost ratio | 1.80 : 1 |
| Net the deal model projected | $68,500,000 |
The program returns $47,400,000 net of its own cost across three years, a benefit-to-cost ratio of 1.80 to one, against a modeled net of $68,500,000. It delivers a clearly positive case and a measurably smaller one than promised, and the gap between those two is the honest subject of this document.
Read the ratio with one caution. Synergy is recurring and integration spend is one-time, so the ratio improves every year after Year 3 without anyone doing anything — quote a long enough horizon and any integration looks excellent. The three-year window is used because it is the window the deal model committed to, and changing the horizon to improve the answer is the most available way to make a cost-benefit case say what its author wants.
6. What is not counted, and why
- The purchase price ($1,200,000,000). Not an integration cost. Including it would swamp every other line and measure the transaction rather than the program.
- Deferred scope ($1,900,000). Two items moved to a Year 2 backlog with named owners. Their value is neither claimed as captured nor removed from the target — removing it would raise every percentage above and make the program look better for having delivered less.
- Dissynergy allowance ($6,000,000). Held in the deal model for revenue and productivity lost to the disruption of integrating. It is carried in the transaction case rather than here.
- Benefits still landing. A Year 3 target cannot be verified by a program closing in Year 2. Tracking transfers at closeout with both measures intact, and the receiving owner inherits a series rather than a summary.
Related artifacts: 13 — Synergy Realization Plan · 41 — Synergy Realization Tracker · 49 — Total Cost of Ownership · 46 — Closeout Report