For the first time in forever,
You don’t have to be afraid,
We can work this out together.

—Anna in Disney’s Frozen

An Academy award. $1.3 billion in box office revenues. Millions of wide-eyed boys and girls. Disney’s Frozen is not only the world’s most successful animation feature film ever but also the fruit of an ingenious “postmerger rejuvenation.” How so? In 2005, Walt Disney was lagging in creative output and commercial traction. It then acquired a small but fast-growing animation studio, Pixar. Rather than absorbing Pixar into the Disney machine, Disney instead used Pixar as a stimulus for self-disruption, learning, and ultimately growth. This required both the confidence to allow some units to remain separate and the ingenuity to recognize where and how to use Pixar’s practices to stimulate Disney’s growth. Notably, Disney put Pixar’s leaders in charge of bringing new glory to its own fledgling animation studio, wholly rejuvenating itself in the process. The result: an annual total shareholder return of 22% and a series of blockbusters culminating in Frozen.

The Overlooked Opportunity: Rejuvenation

Large, established companies like Disney don’t have it easy. Many are struggling, delivering 3% lower TSR, on average, than their smaller, younger peers. The need to continually grow and create value is hardly news to leaders of established companies. Seeking to expand their business but faced with a deficit of organic growth opportunities, many resort to a classic recipe: acquiring and integrating peers to build scale and realize cost synergies. Results vary. As is well known, close to 60% of all deals fail to create value. (See The Brave New World of M&A: How to Create Value from Mergers and Acquisitions, BCG report, July 2007.) These lackluster results are often attributed to poor execution of the post-merger. This may be so, but we see a bigger underlying problem. Large companies need a better, more nuanced approach to PMI.