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I think one atrocious mistake companies can make is claiming success prematurely. I think most people that work in M&A would know that a deal is long, and unpredictable despite all the planning and due diligence that go in it. Despite knowing that most experts, shareholders and stakeholders are quick to claim a successful deal based often on overestimated synergies.
Failure to make the TargetCo adhere to anything related to the acquiring company, including corporate name, emails, organizational structure, etc. Failure on every level of “integration”, other than the balance sheet.
Post M&A integration only focus on moving tangible assets e.g. Premises and I.T
Failed to consider non-tangible assets e.g. Employee relationship, Retention of Key persons and Knowledge Management
Failure to define clear success targets which help guide teams in their decision making and keeping team members focused on what’s most important. Sometimes it may be a lack of metrics and other times you may have too many, competing metrics.
Agree with all of the comments so far. From my experience I would add that many of the worst integration mistakes come from the employee components of the transaction (noted above as well). A recent example that I observed was a situation where, at the time of close, employees from multiple functions were fired on the spot and let out of the building(s). It was another 24+ hours until any kind of communication from management went out to the broader company. Needless to say, the rumor mill was swirling out of control. The actions of management of the acquiring company led to a great deal of stress and distrust from the get go. Poor communication and rollout on the front end created more work for management in the long run.
Some great comments in this forum. I appreciate the high level of experience in this group! Being a technology integration specialist I tend to see challenges with security and the integration of data. These problems should not be understated as they ABSOLUTELY can affect the overall valuation of the M&A. Some would say “security especially” but data problems can be a massive road block to ultimately achieving the value that is expected by the financial team.
We have found especially in acquisitions where an “older” more established organisation acquires a start-up or agile organisation that the perceived opportunity to leverage the technology, the secret sauce, of the startup is more difficult and costly than was first estimated. This is due to the the ability of the smaller organisation to move faster and adapt the technology free from onerous, but needed, governance and approvals that you would find in a larger organisation. These further include security concerns and non-scalable software created for large enterprise use.
Failure to understand the target’s proprietary technology pre-close.
One common failure is the lack of understanding regarding the technology critical to the target’s operations. From the acquirer’s perspective, technology is often seen as a black box. The business case and pre-close integration planning frequently materially underestimate the time and resources required to integrate the target’s proprietary technology.
Lack of retention of target key employees
One common issue is the failure to retain key employees of the target company. Valuable human capital is often lost as star employees tend to leave.
In many cases, the retention efforts, such as incentive packages, are insufficient to motivate high-performing employees to stay.
The cross-selling of products is a common challenge in integration.
Cross-selling is frequently included in the initial business case and integration plan. However, it often relies on imperfect information and incorrect assumptions, leading to elusive benefits in practice.
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