[Sarah Miller]

Our company’s approach has always been to take a “light integration approach” where you assume risks to close the deal faster and to basically allow them to continue doing what they were. In my opinion, this was hard for me to accept given so much can be missed, putting your company at risk and wasting time and resources. We are now evaluating these new companies and may be selling or downsizing them because they haven’t been as profitable (for a variety of reasons). What advice do you have to convince leadership to be more thorough, to fully complete the due diligence phases and to recognize synergies early on? We aren’t a big company with a lot of resources.

[Kenneth John Manning]

Hello Sarah, this all depends on your M&A strategy, is Leadership happy with the sale or re-structuring of the new companies? Are the returns acceptable? Am I right to assume that the light integration approach is based initially on Financial DD? It can be seen that to have a higher chance of a successful Merger or Acquisition the initial assessment should not only be based on financial assessments but also the strategic and sociocultural fits.

[Rachel Boynton]

Sarah,
You might use some of the past acquisitions to demonstrate the need for more robust, upfront diligence. By showing how you might have learned some of this information prior to acquisition might help demonstrate the need. You might create an updated DD list with key components learned.

[Rachel]

Hi Sarah,
Thank you for your great forum topic and I must say that I agree with the other Rachel on using a past acquisition as a proof point. I also went through a “failed” acquisition at a previous company. There was no real integration program or plan and two years post acquisition, the product had no competitive advantage in the market as the messy integration took focus off product strategy and R&D. A lot of people lost their job and there was likely no ROI on the acquisition in the end. Even a small integration plan that is well communicated across the organisation would haev worked wonders in this case.

[Erin]

Hi Sarah,
Thanks for posting this forum topic. I can see how things would get lost in the shuffle. This is one of the main failures of acquisitions – failure to act on synergies determined. I currently work for a company that was acquired by a corporation almost exactly 1 year ago. We were acquired as we provide services they do not provide- but are an opportunity to provide their clients an endpoint to their starting point. At the beginning of the acquisition being finalized, we were told by the acquirer that nothing would change immediately. They focused on building rapport and developing relationships within divisions that they had identified synergies in. In my opinion, this was helpful to our employees from a standpoint of creating trust and avoiding mass exodus. Nobody lost their jobs, and we were essentially allowed to go on with business as usual. However, in the background, leadership from both sides were continuing to meet on a bimonthly basis to discuss an action plan for further integration. Those integration talks have recently come to fruition and were are in the process of merging with 3 of the corporation’s other subsidiaries as an overall new division. These synergies were not forgotten. I think encouraging your leadership to develop a “task force” of sorts that will continue to identify and develop these synergies is crucial so they don’t get lost in the day-to-day.

[Corbin Metz]

My question would be “what is the incentive?”. Obviously everyone wants to win, and leadership wants the business to grow. If you can demonstrate with some simple cases of what has been done in the past, and how well it has gone (poorly, rates declining, etc.), given the “light integration approach”…then provide them with a new approach that includes DD steps upfront, then you can demo to leadership that given a small upfront investment of DD can avoid loss in profit to poor decisions/bad strategy that permeates the culture today, and win more profitable & synergistic business in the future.

[Pang Lai Li]

The success of any business depends on the caliber of people who perform the most important tasks. This is why a thorough leadership background verification is so important.

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