Integration Acceleration

Why successful M&A now depends on getting your ducks in a row as early as possible.

Getting the Word Out

In addition to coming up with an integration plan that focuses on a deal’s key value drivers, experts say it is also important to share relevant details of the plan not only with the integration team but also with business-unit leaders and the employee population at large.

“Surveys consistently show that most deals don’t fail because of poor strategy but because they have not been properly executed,” says KPMG’s Miller. “And the first part of proper execution is communicating the strategy to your teams in a manner they can viscerally understand.” Burke advocates creating a “succinct one-pager” for management and the integration team that summarizes what the company is buying, how much it is paying, and what it expects to get for its money.

Keeping employees in the loop, even those not directly involved in the integration effort, is critical, even when details are scarce. Deloitte encourages clients to use the Web to keep employees abreast of a deal’s progress as early as possible. “At the beginning there may not be a lot to offer, but merely acknowledging what is going on, explaining that there are people working on it, and assuring employees that you will provide information when you have it shows that you understand they are curious and will share information when you can,” Powers says. “As they see you live up to that commitment, they start to trust the process, and that enables them to more quickly get comfortable with the outcome.”

Communication should work both ways, not just in pushing out the news as a deal takes shape, but in analyzing its success after the fact. Despite the new focus on speed, integration managers at best-practice acquirers don’t simply close the books on the most recently completed project and move on to the next. Instead, they hold postmortems to learn from their experiences.

Intel, for example, conducts what it calls “after-action reviews,” or AARs, for everyone involved in a transaction. “We tear down the deal we just did, figure out what went right, what went wrong, and what we want to do in the future,” says Burke. “It’s cathartic, and it also reminds us that it’s all these small things, these bread crumbs that we leave behind, that help us learn and change. It’s what makes us better for each subsequent transaction.”

For all its travails, the recession has left many companies cash-rich, and this year may see many of them looking to put that money to better use by making acquisitions. Taking the “post” out of “postmerger integration” can be one very important way to make sure that that money is spent as wisely as possible.

Randy Myers is a contributing editor of CFO.

 

 

Synergy? Don’t Be So Sure

For CFOs, valuing the “synergies” to be realized by eliminating overlapping or redundant systems and operations is a fundamental aspect of M&A due diligence. It also can be a trap, especially for finance chiefs pushed to provide estimates before they can get a close look at a target’s operations.

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