Solving the integration equation early in M&A process
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In the current environment, with the increasing price of debt and inflation impacting on earnings of potential targets, successful integration is critical to the success of any M&A activity. Integration can be a complicated process, demanding a fast pace to keep momentum and garner maximum value in the wake of a deal. A clear vision of the end goal is important to guide the strategy and processes, as well as a capable all-rounder in the lead and solid communications to keep all stakeholders on side.
Integration is difficult, but can be even more difficult when there is lack of clarity concerning the deal synergies and target operating model. However, situations can often change once the deal is closed,.. and there has to be some flexibility to adapt accordingly, but stakeholders need to be advised, and the appropriate integration governing body needs to approve changes to the deal business case, integration scope & timeline.
I agree with Mark’s comments – clarifying your objectives (& expectations) is critical to realizing deal synergies. While you may not have to have all the ‘operational integration aspects’ fleshed-out beforehand, you should at least have a draft, high-level plan prepared. This will ensure that you have a thought-out plan beforehand, but it ensures that it aligns with the overall M&A deal; think of it as an ‘essay outline’ for the ‘final paper’.
I agree with Luke’s comments, “A clear vision of the end goal is important to guide the strategy and processes, as well as a capable all-rounder in the lead and solid communications to keep all stakeholders on side.” We have found that having a clearly defined near term operating model or integration strategy is productive to kick-off the integration team early, but to refine this as the teams learn from the integration activities; this becomes our future state operating model or integration strategy.
Very valid inputs, definitely is necessary to avoid the lack of a clear strategy / vision, ineffective communication, neglecting cultural differences, inadequate planning and overlooking financial implication. Maintaining a clear strategy, having capable leadership in place, ensuring an effective communication, being financial aware managing financial expectations in a realistic matter, aiming operational excellence, fostering cultural integration and managing risks proactively, organizations are in a better place to navigate the integration complexities and maximize the acquisition value.
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