G&A Isn’t Fat, It’s Insurance: Protecting Your Bottom Line Post-M&A

In the aftermath of a merger or acquisition, few things are targeted as swiftly, or aggressively, as general and administrative (G&A) expenses. Investors demand cost discipline, management promises synergies, and somewhere near the top of every integration plan is the bullet: “reduce G&A.”

But here’s the problem, treating G&A as fat to be trimmed often leaves the business exposed. In reality, strategic G&A functions more like insurance. It safeguards operational continuity, regulatory compliance, and long-term value creation. And in the high-stakes environment of post-M&A integration, slashing G&A too fast or too deep can end up costing far more than it saves.

G&A covers the invisible infrastructure of a company. That includes land administration, legal, IT systems, finance, HR, regulatory compliance, and internal audit. These functions rarely show up in a reserves report, but without them, no oil producer can operate at scale. These departments ensure leases don’t expire unnoticed. They manage title disputes. They process mineral payments correctly. They ensure cybersecurity during the handoff of systems and data. And they create continuity for employees and vendors alike when two operating cultures collide.

When an acquirer removes G&A too quickly, especially before systems and workflows are fully integrated, it destroys the very foundation the deal was built on. Processes slow. Errors multiply. Institutional knowledge walks out the door. Lease obligations get missed. Royalty payments are misrouted. Regulatory filings go out late. And the supposed synergies vanish into a fog of operational dysfunction.

These mistakes are especially costly in upstream where land departments are often first on the chopping block because their value is indirect. Yet the risk of mismanaging a single high-value lease, particularly in a legacy basin, like the Permian, with scattered title history and complex spacing units, can exceed the entire G&A cost savings projected. The same is true for compliance staff familiar with state-by-state reporting requirements, or IT personnel who understand the intricacies of the acquired company's data structure. When you cut too deep, you don’t just shrink overhead, you sever operational continuity.

We see the pattern all too often: a company acquires a smaller operator, removes redundant personnel, consolidates offices, and announces efficiency wins. But six months later, delays in drilling schedules are blamed on permitting slowdowns. A lease is lost because a renewal wasn’t filed. Audits reveal miscalculated working interests. And a quiet backlog builds in integration projects that no longer have enough staff to push them through.

This is not a call for unchecked overhead. Energy companies must operate lean, particularly in a volatile commodity environment. But lean is not the same as fragile. Strategic G&A investment creates resilience. It allows a company to absorb new assets while continuing to function. It protects against downside risk during a period of maximum organizational complexity. And it gives leadership time and bandwidth to focus on value creation rather than crisis management.

There are also smarter alternatives to indiscriminate cuts; some operators have begun conducting “functional criticality assessments” before reducing headcount. This means ranking teams not by title, but by process dependency and institutional knowledge. Others retain transitional G&A roles for six to twelve months post-close, allowing for handoffs, documentation, and system training before final reductions. A few go further, embedding integration leads in G&A departments themselves, acknowledging that value capture depends not just on what you buy, but how you operationalize it.

Ultimately, the most successful M&A strategies are not those that promise the fastest cuts, but those that preserve the greatest amount of value. That means rethinking G&A not as corporate fat, but as operational insurance—critical coverage during the riskiest phase of any transaction.

Cut too much, and you may win the headline…only to lose the deal.