7 Ways to Accelerate M&A Integration & Make It Successful
CEO and Founder of DealRoom
Accelerating your m&a integration often comes down to early planning, process management, and the tool, or tools, used to make your process management more effective.
These three arenas should help m&a integration teams, as all three have the potential to lead to increased communication, collaboration, team member efficiency, and an overall more successful integration.
So, What is Successful M&A Integration?
Successful M&A integration is the result of joining two or more organizations into a single organization. Integration includes successful review and consolidation of employees, assets, resources, technology, and more. Teams typically wait until after a deal closes to start the process, but to have a truly successful integration, teams need to plan for integration alongside diligence.
Common M&A Integration Problems
failure to plan early
disorganized process management
lack of proper tools
In order to combat these common M&A integration problems, proper preparations are needed to ensure that integration runs smoothly and is beneficial to all parties involved.
Advice for Successful M&A Integration
1. Early M&A Integration Planning
Diligence cannot be allowed to eat up so much of executives’ time that planning for integration is missed. In fact, it is during diligence that the tone for the most successful integrations is being set.
During this early planning stage, the buy-side needs to be sure it is connected to the appropriate people from the target company; therefore, an Agile-esque kick-off meeting, or gathering of all potential stakeholders, is necessary at the commencement of diligence.
This creates clear expectations, in addition to allowing the buy-side to gather critical information related to the target company’s culture and how well (and fast) the target company functions. Additionally, connecting and communicating with the right individuals leads to fewer information gaps down the road, and provides a proactive approach to potential problems, while also avoiding the time drain of always having to bring m&a integration teams up to speed.
2. Align Cultures in Advance
No two companies are alike. For example, a company with a formal environment, typical 8-5 day, business professional attire would not see eye to eye with a company who has a casual environment, employees show up at 9:30, and work remotely half the time.
And more often than not, mergers bring together companies that are polar opposites of each other. Leaders and management roles need to work together to form a company culture plan that is a compromise and mix of each organization is employees don't face culture shock once the deal is closed.
3. Process Management
Process management is another crucial aspect of planning for, and executing, a smooth m&a integration. A strong PMO should keep everyone performing at high levels (hence, accelerating your integration), create transparency, and keep the acquisition safe.
Transitioning to a more Agile approach has been proven to improve the integration process as teams are looking at the big picture versus a checklist of tasks. This eliminates the wasted time and stoppages often associated with a more traditional waterfall workflow. (check out our intro to Agile blog post here)
It also eliminates team members spending time on small checklist items that really do not matter in the grand scheme of things. In addition, Agile project management can eliminate, or at least greatly reduce, negative associations the target company may have with m&a integration.
How does Agile do this? Well, with Agile, small changes are implemented over a period of time - so nothing radically changes overnight. This greatly aids employee morale and buy-in.
4. Using the Right Tools
While a tool is never the cure-all for any team’s M&A problems, the right tool can speed up the m&a integration process and produce valuable data for post merger integration teams. DealRoom has been proven to help deals close 40% faster, but today I would like to focus on how DealRoom can be used to super-charge your integration needs. DealRoom is a m&a integration tools with an overlay for due diligence requests.
When the buy-side or banks use DealRoom, they see increased collaboration and a massive cut-down of emails. When DealRoom’s use is continued to integration and post-closing activities, its data can be reused and the tool itself can help the integration team avoid duplicate work - a common pitfall that slows the entire integration process and wastes valuable employees’ time.
More specifically, items can be tagged during the diligence process for integration.
5. Be Honest about Personnel Placement
There is no question that employees' roles often shift and change following a merger, and unfortunately, sometimes roles seize to exist. Employees often feel negative about a merger because there is uncertainty about the company's direction, their jobs, and leadership. And if company culture shifts are not accounted for, employees may quit due to so many organizational changes.
The key is to keep employee turnover as long as possible, and to do this, upper management needs to create transparency, communicate, and be honest about upcoming changes. They need to have set reduction and replacement strategies planned out for m&a integration to run smoothly.
6. Accept Technology Shifts and Train Employees
- Mac vs. PC
- Gmail vs. Outlook
- Google Doc vs. Microsoft Word
These are common technology arguments that employees usually feel strongly about. When two companies merge, it's highly unlikely that they use all the same technology and software. Management teams need to decide which tools and IT to adopt, how to merge their data, and most importantly, properly train employees.
7. Plan for M&A Integration During Diligence
Planning for integration during due diligence process and taking a more Agile approach can make for faster and more successful integrations. After all, deal-making is all about maximizing value.