We believe there are 5 M&A integration guiding principles when you're considering an M&A deal, directing the integration of a new acquisition, or looking back to learn from a previous experience. 

If you start with a good business strategy and make sure your organisation is ready to handle an integration, you'll be more likely to gain from an M&A acquisition. We've seen situations when a private equity parent or a zealous CEO recognised an opportunity and jumped at it.  

CASE STUDY

If you’re a PE owner and push for the acquisition without thinking about whether the company's business processes and systems are stable enough to absorb it, you risk harming customer satisfaction as a result of the rough integration. However, if you take into account ongoing operations as well as long-term benefits from the beginning and throughout the planning process, you'll be on the way to a seamless integration. 

Before bidding on another company, make sure your organisation has enough time to plan, prioritise, and resource the work so that the integration goes well. Define the acquisition's long-term goal as well. This will confirm that the strategic decision is correct and will aid in securing buy-in from the various stakeholders. 

You'll have more time to figure out what needs to be done and who will execute it if you start early. 30 days before obtaining a final agreement, assemble an integration team. The integration team will have a preliminary plan in place by the time you announce the deal to shareholders, employees, customers and suppliers, allowing them to answer concerns, communicate efficiently, and eliminate internal uncertainty and anxiety. 

CASE STUDY

Don't, on the other side, rush into big organisational or business model decisions. After the acquisition is closed, you learn a lot about the acquired company. Before closing, some M&A advisers emphasise speed and push to "strike the ground running" on Day One, which includes naming the management team. That, in our opinion, is a mistake. First, if the acquirer has complete control over all decision-making, the acquired company may develop an "us-versus-them" mentality. Furthermore, until the acquisition is completed, it is impossible to know everything there is to know about the acquired company. 

There's also the possibility that the agreement may break apart or the closing date be pushed back. The devil is in the details, and without them, everything might appear simple. Setting arbitrary deadlines based on high-level data and assumptions results in unreasonable targets for synergies, implementation costs, effort levels, and timetables. 

At 30,000 feet, two firms can appear to be very similar. However, you have no notion how another organisation runs until you gain the keys and access to its inner workings and culture. Likewise, question whether you, if you’re the purchasing firm, have a better structure, procedures, or systems. You get the opportunity to observe and learn directly how another organisation operates. 

CASE STUDY

When larger corporations acquire smaller businesses, they frequently make this mistake. It’s tempting to quickly integrate a newly acquired company into your ERP system as soon as possible, but closer examination can reveal big disparities when you map out the acquired company's and your own operations.  

Failure to do so can result in a significant loss of customers, but in the end, if all partners have the correct level of information, input, and engagement, an integration is more likely to succeed. 

 

4. FAILURE TO BE HONEST AND TRANSPARENT IN YOUR COMMUNICATIONS 

Only say what has been confirmed. Before the deal closes, for example, it's dangerous to declare changes to organisational structure or priorities. Closing dates shift, executives accept new jobs, and markets react.  

As part of proactive change management, it's critical to have a communication plan in place to disseminate news frequently and at the proper moments.  

CASE STUDY

It's important to remember that communication isn't limited to memos and town hall meetings. People will conjecture based on who is in charge of which office. Just like the popular proverb: communication is less about what you say and more about what you do. Be as open, honest, and compassionate as possible. Remember that you must also keep clients in the loop in order to keep their trust and prevent losing their business. 

The acquisition will almost certainly have long-term strategic benefits, which you should keep in mind. However, in the immediate aftermath of the transaction, a well-defined plan will concentrate on measures that will minimise disruption to BAU (business as usual). 

CASE STUDY

An integration strategy which ignores several essential day-to-day operations functions can result in chaos that forces the system to call in all hands on deck. Regardless of who your customers are, they should never be impacted by an M&A integration. You'll be in a better position to capitalise on the synergies and other benefits of the merged firm once you've laid the groundwork and the business is solid. 

Now that you know about the 1st deadly M&A sin – having no guided principles – you should be better positioned to strategize for an integration that’s smoother for you and your acquirer, or acquired, organization. 

For the help of unparalleled expertise to implement your deal, contact us at TEIG