Effective Management Of Change During Merger And Acquisition

Best Practices In Merger Integration

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By Catherine Dixon – The Intersect Group

 

 

Best Practices Summary

  • Establish Strategic Framework for Decision Making
  • Dedicate Integration Resources
  • Frequently Assess Cultural Progress
  • Communicate Early and Often

 

— Spell out “Non-Negotiables” as early as Possible

— Jointly formulate a 100 Day Integration Plan

— Communicate to all Employees, Customers, Suppliers

 

 

• Measure Performance Versus Proforma

• Focus on Priorities

 

 

— Objectively and Systematically identify the highest priority Synergies

— Those with Highest Value + Probability of Success

 

 

Move Quickly – everyone is expecting changes

 

 

Key Steps in Acquisition Integration

 

Align Strategy

 

  • Understand Acquiror, Target and Deal Synergies
  • Define Success
  • Confirm Leadership Commitment

 

Identify Culture

 

  • Assess Cultural Differences
  • Identify “Keeps” and “Gives” for Both Organizations

 

Dedicate Resources

 

  • Create A+ Teams to Lead Integration Initiatives
  • Agree Roles & Responsibilities; Tie to Strategy
  • Measure Team Performance and Task Completion

 

Initiatives/Action Plans

 

  • Define and Prioritize Initiatives
  • Develop Detailed Action Plans for Achieving Synergies

 

Execution

 

  • Define Desired End State
  • Set Metrics and Monitor Team Progress
  • Transition to Operations

 

Manage Information

 

 

 

Aligning Strategy and People

Timeline
Figure 1: Timeline

 

The Wrong Way

Figure 2: The Wrong Way

 

The Right Way

Figure 3: The Right Way

 

Dedicating Resources

Figure 4: Dedicating Resources

 

Cultural Considerations

• Cultural integration…

 

— Spans all functional areas

— Is not an event; it is an interactive, complex process

— Takes a long time

 

 

• Commitment is critical to success

— 80% of integration problems relate to cultural issues

 

 

• Teamwork is important throughout

 

• When in doubt, err towards over-communicating

 

 

 

Ways to Reinforce and Create Culture

 

1. Rules and Policies

2. Goals and Measures

3. Rewards and Recognition

4. Staffing and Selection

5. Training and Development

6. Events

7. Leadership Behavior

8. Communications

9. Physical Environment

10. Organizational

 

 

Communication

• Focus on formulating and telling the story

— Consistency and frequency of communication is key

 

• Target personnel have often been disappointed by previous buyers

 

• Introduction should start broad then narrow to functional information

 

• Understand the impact of integration on the business – burnout is often an issue

 

 

Initiatives and Execution

Figure 5: Initiatives and Execution

 

Definitive Agreement

 

 

• Earnout structure and measurement

 

— Revenue and gross margin versus EBITDA

— Months, not years

 

• Post-closing tax matters

 

 

Transition Services

 

• Encourage and incentivize rapid decoupling of systems

 

• Penalties for delays

 

 

Employment Agreements

 

 

• Incentives – sales, stock-related compensation, bonuses

 

• Address potential for departure, role shift

 

• Signed by close of deal

 

 

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