Getting your M&A ducks in a row
10 February 2018
Integrating companies effectively and with minimum stress requires thoughtful preparation and a light touch. Steve Hemsley reports.
A failure to devise an integration strategy and implement it early can cost buyers time and money as they struggle to unlock the real value of an M&A deal.
The work to amalgamate functions such as finance, procurement, IT and HR should begin before the contract is signed. The potential synergies of the companies involved must be well defined and employee engagement made a priority.
There should be an internal and external communications plan and representatives from the buyer should be on site when a deal is announced to reassure staff, get them excited and to answer questions.
The Hackett Group works with organisations going through an M&A transformation and it has published a report into integration best practice. It says buyers should study every function within each company to reveal where things work well and where there are areas to improve.
“Benchmarking informs integration planning decisions and helps to determine how best to streamline and standardise processes within the new entity,” says Philip King, Hackett’s Global Business Services Senior Director.
He adds that companies that are successful with merger integration also use benchmarking to move beyond the usual level of detail considered necessary during the due diligence process. “It provides meaningful transparency into the operations of the target company to give a more accurate assessment of the opportunities and the risks.”
Effective planning can also remove barriers to integration. These include leaders not supporting the changes triggered by the merger, disengaged staff and suppliers who have not been adequately informed about the deal, cultural differences and a lack of clarity on project goals and priorities.
“Successful companies proactively anticipate and address these issues by creating activities that embed the new processes and systems into peoples’ day-to-day routines,” says The Hackett Group’s Cost Leadership Director John Kennedy.
He says this includes assessing whether workers actually have the skills to support the changes and then providing adequate training so they can perform new tasks. “It also means defining and articulating roles and responsibilities, identifying key behaviours and gaining workers’ views on performance targets.”