Kone’s TKE Deal is a Service-Network Bet

It’s a big deal by any measure. But the size isn’t the most interesting part. What Kone is really buying is a service business, and that shapes everything from the deal’s logic to how it should be integrated.

Why service is the real prize

About 65% of the combined company’s sales would come from service and modernization. That means maintenance contracts, repairs and upgrades on elevators and escalators that are already installed in buildings around the world.

New installations depend on construction activity, which rises and falls with the economy. Service revenue is much steadier. Once an elevator is in a building, it needs regular inspections, repairs and eventually upgrades for decades. Building owners can’t simply stop maintaining them.

Owning more of that installed base gives Kone more predictable revenue. It also gives it more density in each city, with more elevators to service within the same area. That density matters, because it lowers the cost of every service visit and makes each technician more productive.

That’s also where most of the planned savings come from. The companies are targeting about €700 million a year in cost savings within three years, much of it from combining overlapping service routes, technician teams and back-office functions.

The long wait

The challenge is timing. A combination of two of the world’s largest elevator companies will face antitrust review in many jurisdictions, and the companies don’t expect it to close before the second quarter of 2027. That means a year or more in which Kone and TKE must keep operating, and competing, as separate businesses.

Long regulatory reviews are where integration plans often lose momentum. The plan gets written around signing, when the deal team is fully engaged. Then it sits on a shelf while lawyers and regulators do their work. By the time the deal closes, some of the people who wrote the plan have moved on to other projects, and some of its assumptions no longer hold.

Using the waiting time well

A long review doesn’t have to mean a long pause. There’s a lot a buyer can do during that time, within the limits of competition law.

First, plan within the rules. Clean teams, made up of people who are allowed to see sensitive information from both sides, can do much of the detailed day-one planning without breaking competition rules. That work can move forward while the review is underway.

Second, keep the plan alive. Review and update it on a regular schedule rather than only at signing and closing. Markets, leadership and priorities will change over a year, and the plan should change with them.

Third, protect the frontline. In a service business, the technicians and their relationships with building owners are the asset. A long period of uncertainty is exactly when good people start to look elsewhere, so communication with field teams matters a lot.

Fourth, plan for remedies. Regulators may require the companies to sell certain businesses in some markets. The integration plan should account for what the combined company looks like with and without those divestitures.

Keeping diligence and integration connected

One risk in a long deal is that the knowledge built up during diligence gets lost before integration begins. Amy Weck, who leads M&A and integrations at The Liberty Company Insurance Brokers, has pointed to the disconnect between diligence and integration teams as one of the biggest mistakes in M&A. In an M&A Science interview, she recommended involving integration leaders as soon as the LOI is signed. She was also realistic about the effort involved: “Integrations are not easy; it happens over days, weeks, months, and sometimes years.”

That advice is even more important when the gap between signing and closing is a year or longer. Keeping the same people involved from diligence through integration protects the knowledge that makes the plan work.

The takeaway

Big, slow deals reward buyers who treat the waiting period as working time. If Kone uses the next year well, integration can start on day one instead of a year after closing.

Sources

• KONE and TKE to combine, creating a world-class company in the elevator and escalator industry, Advent International press release, Apr 29, 2026
• Kone to acquire PE-backed TK Elevator in $34bn deal, Financier Worldwide, July 2026