M&A strategy shifts creating unforeseen integration implications

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    Dustin Delewski

    Over the last few years, I’ve seen my company’s M&A strategy evolve from building onto core capabilities to branch out into new capabilities (new revenue streams, new customers). A lot of this is necessary to sustain growth as we’re running out of M&A options for the core capability space. I see executives underestimating the complexities that integrating new revenue streams and customer types brings, especially in the order to cash business process. Introducing new revenue streams and customers into the business processes often requires that IT applications supporting the business process need to be configured or even enhanced to accommodate taking an order and invoicing for a new type of service/revenue stream. This also typically means that the staff currently supporting these pieces of the process cannot simply absorb the extra workload as the sub-processes vary from the current state. Adding new competencies into a business unit that supports a core competency becomes more expensive and/or less synergistic than deal leadership and corporate development expected (either the current system/team needs to be built out to integrate the new sub-processes, or the original system of the acquired company and team may need to stay in place).

    I’m curious to know if others are seeing this in their businesses and what that looks like for them. In addition to educating leaders and becoming more ingrained in the early conversations of M&A strategy, what other suggestions and best practices does the community have for these M&A strategy shifts and integration expectations?

    Jarrod Patterson

    We are beginning to see this shift in our M&A strategy as well. So I do not have any best practices per se, I can definitely sympathize with you! I will say that one thing we are focusing on is strengthening our integration capability by documenting our integration processes and trying to make them more visible to all workstream leaders that are typically involved with integration activities. This will hopefully lead to having discussions related to any new capability issues much earlier in the planning process as opposed to dealing with a problem 6 months into the integration.

    I noticed this question was posted earlier this year. Do you have any updates or best practices from your experience with your company?

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