Integration Lessons Learned: Tips from a M&A Advisor
Mergers. Acquisitions. Synergies. These are buzzwords in today’s marketplace that bring thoughts of improved financial results and big bonuses. However, as the days of financial engineering fade away, businesses are beginning to embrace other words like integration planning, change management, and organizational alignment. In my role as a consultant specifically focused on the operational mechanics of mergers and acquisitions (M&A), many pitfalls and best practices have become apparent.
Synergies are not defined on the back of a cocktail napkin.
People would be shocked to see how little thought can go into quantifying millions of dollars of synergies (the potential financial benefit achieved through the combining of companies). Rather, we guide our clients to accurately quantify each synergy, time-phase their impact based on the level of effort to implement, and most importantly, develop discrete capture plans to ensure ownership and actions are aligned with leadership’s goals.
Integrations should not be planned without involvement from functional leadership.
All too often we see that integrations are planned solely by the C-suite, and when those plans get turned over to the people who execute them, they unravel. While the desire can be to keep a potential acquisition a secret, at a certain point in time when the deal becomes viable, it is essential to involve some of the “boots on the ground” managers to contribute to meaningful and attainable synergy capture and integration project plans. Ultimately, these employees will own these projects, so obtaining their buy-in up front goes a long way.
Integration is a full-time job.
I say this to almost every client who is contemplating a merger or acquisition. It can be an internal or external resource, but no matter what, leading an integration effort is not something you put on the shoulders of your Ops VP, CFO or another key employee who has to attend to business as usual. Rather, invest in someone who can be fully dedicated to the day-to-day of integration project management. This project manager will develop detailed plans, provide key status updates to project sponsors, align resources with the myriad goals of the integration, and measure the success against the synergies everyone wants to achieve.
Don’t underestimate the difficulty of changing culture.
I’ve learned that of all the types of change (process, system, etc.), culture takes the longest to successfully convert. Being realistic about these challenges and developing comprehensive change management plans that include communications strategies and training plans can attack this difficulty head on. Furthermore, many executives want to draw a line in the sand fairly early on in the process: “If you aren’t on board, you can get off the ship.” While drawing that line may eventually be necessary, we guide our clients to be patient and give legacy employees every opportunity to buy into change to avoid losing valuable institutional knowledge.
Contributing Author: Alex Benanti, Senior Manager Integrations
For more information on Riveron’s approach to pre-close planning and post-close execution, please download the .pdf below