Making the Most of Your New Acquisition

You and your teams have spent countless hours building your investment thesis, completing your due diligence, arranging your financing, clearing the regulatory hurdles, and negotiating the final terms and conditions of your deal. Hopefully, you were also planning for a well-managed integration. Some of the key considerations listed below to plan for will ensure you start off on the right foot. On the other hand, if the following factors are not well-managed, they can destroy the potential value of your investment right before your eyes: 

Clients – Understand what your transaction looks like from the eyes of your client.  Understand the risks and opportunities from their perspective. For example, do they have a product that they depend on from the company you are acquiring?  Will you discontinue a product they depend on in favour of a “close substitute” you now have in your portfolio?  What will be the future of an Account Executive that they have a trusted relationship with?  Was your client previously a top-tier client and now with your newly acquired client portfolio bumped down in relative importance? Stratify your clients, build common messaging for them that addresses their specific needs, and have an appropriate plan ready for how your organization delivers the message.  

Employees – Have a plan for the new team of employees you are integrating into your organization.   Understand who the leaders are – the ones that people will take their cues from. Understand who your critical resources are – those who have critical knowledge of your new business. Have a plan for each one that secures not only their commitment to stay but their desire to stay. 

The Key to Execution – Establish a Control Tower / a Project Management Office (PMO) – a good PMO leader will help you make sure you have a cohesive integrated plan, and help you make sure you achieve your milestone dates and results. There will be several parallel workstreams with interdependencies and a well-constructed master schedule will be instrumental in optimizing the outcomes. Some of the key workstreams are as follows: 

1. Communications – Messaging must be consistent and abundant for all key audiences. Messaging vacuums bread rumours which will create headwinds to your best efforts. Core Values are a foundational element in building a common corporate culture. Having a strategy for Core Values as a single company is critical. There are many options here depending on the scenario, regardless, establishing a cohesive identity based on a foundation of Core Values is critical to creating human synergy. 

2. Human Resources – Many difficult, personal decisions must be made and acted on, such as organization structures, pay range and job title alignment, benefits alignment, and performance management systems, to name a few. Carefully consider these ahead of taking action.

3. Finance – Full financial systems integration, high-level aggregation, policies and procedures harmonization, audit and compliance are just a few of the decisions and changes to think through in this workstream.

4. Information Technology – Technical integrations, security concerns as well as policies and procedures are a heavy lift in most integrations and will require tight coordination with the other functional workstreams.

5. Operations/R&D/Quality/Operations Excellence – Keep an open mind, identify and adopt “best of both” business practices, and use data to drive decisions. If you can get past egos and resistance to change, you can harvest meaningful synergies.

6. Legal – Supplier and Client contracts: what is your strategy for your newly combined businesses? This workstream will review existing contracts and decide the appropriate course of action for each.

7. Suppliers – Bringing two companies together often creates opportunity with suppliers. Increased volumes with the same supplier can be leveraged for better pricing. Similarly, the same or substitute products/services with different suppliers are opportunities to create competition for higher volumes. This workstream often will be a big line on your synergies tracker.

8. Branding – Now with two company identities, which one will you choose? Does the acquisition have a stronger brand than the acquiring company? Strategies and plans for websites, social media, labelling, etc., must be thought through and acted on in a structured way.

9. Synergies – Don’t lose sight of your investment thesis. Do the benefits come from top-line growth, bottom-line expansion, or both? What is your baseline, how will you measure growth, productivity, and other key metrics? Your CFO will play a key role in keeping all honest.

Finally, the most often underappreciated professional skill is Change Management. Human nature is to resist change. Human resistance can foil the best-laid plans. Deploying best-in-class change management practices can be the difference maker for a successful acquisition integration.