Best Practices For M&A Integration

According to the Deloitte The state of the deal: M&A trends 2019, 32% of corporate respondents reported that inefficient and incomplete integration was the cause of failure to meet expected outcomes in their recent mergers and acquisitions. Effective integration was the single most important factor identified for achieving a successful M&A. My experience leads me to agree with this. Adherence or lack thereof to four over-riding principles can make or break the success of an M&A.

Acknowledged uniqueness

Each deal is unique, and every aspect should be tailored to that uniqueness. Trying to implement out-of-the-box integration solutions is asking for trouble. Every action needs to speak practically and directly to stated and measurable goals, be they plans in operations, management, back office, etc.

The driver of designing effective integration is thorough knowledge and communicability of what success will look like, stated in measurable concepts. Nearly a quarter of the Deloitte corporate respondents claimed that due diligence had not been done effectively and a slightly higher percentage identified a lack of clearly delineated integration design. Of course, this covers identification of appropriate targets and accurate valuation. But at any time, if leadership loses sight of specifics and attempts to apply a solution because it worked before rather than because every single parameter fits, chances of success is diminished before integration is even reached.

Quantified value

It is easy to see sources of value in targets, but it is much trickier to translate that value into concrete performance goals. Both hard numbers and processes must be taken into careful consideration, and building some flexibility into the plan will allow for vagaries without triggering complete breakdown of the plan. A set-it-and-forget-it mentality will more likely be fatal.

Also, wise M&A leadership will engage established management in planning, measuring, and understanding the accountability structures from which expected goals are to be met. Procedures and meetings can be created to invite contribution from every level and every site. Obtaining buy-in and feedback from employees “on the line” will do a great deal to ensure accurate planning and appropriate expectations.  

Intentional culture

Company culture seems to be only surface manifestations of a business, inconsequential things like coffee breaks and dress codes that can be changed with little impact. However, company culture is also a deeper and less visible system of management style and how work gets done, and it is at this level that there is a great deal of danger in frustrating and alienating employees. These factors have impact in every department and hierarchy, and they are different at every discrete location.

Early in the work of acquiring and merging, effective integration will establish clear ways to reduce employee uncertainty and offer reasonable rationale behind decisions large and small. The same communication and feedback loops created to help quantify value can serve to make employees feel heard during change. Failure to address issues quickly and effectively can undermine stability of execution.

Dedicated leadership

While it is tempting to cut leadership positions and save funds, it is critical to have the right leaders in place to lead and implement integration: those who have the skills and knowledge, both at the top and downstream. By making an integration leadership role a career accelerator rather than a temporary diversion, the most effective leadership can be retained to ensure the best success of the merge. Individuals with a solid track record should be assigned full-time roles, leaving operations leadership un-distracted from their day-to-day tasks.

It is clear that each of these guiding principles overlaps considerably. Due diligence in discovery at the start can grow wearisome, as can the execution of integration. However, if the maximum degree of success is desired from the transaction, there can be no shortcuts along the way.