For many people, business acquisition is their main growth strategy. They plan for mergers and acquisitions with great diligence.
However, most experience difficulty after closing because they don’t have a clear directive on how to efficiently carry out an integration growth strategy.
In this post, M&A integration expert, Jennifer Goldman takes us through her post-merger integration expansion model – the ‘simmer pot’. Here are her best practices for new business owners.
Best Practice #1 Focus on People, Productivity, Profitability, and Growth
With so many moving parts and different things vying for your attention, new owners would do well to only focus on the following four main areas – people, productivity, profitability, and growth (PPPG).
People: The employees working for the acquired business as well as the vendors and client base.
Productivity: What is the existing culture like? The expectations and work ethic? What seems to bring out the best efforts in people?
Profitability: Examine thoroughly the profit and loss statements, balance sheets, and all possible financial metrics.
Growth: What areas are ripe for expansion, what does growth look like in this industry, are there any patterns worth noting?
Summary: “New owners should focus on the people, productivity, profitability, and growth. Try to keep the three Ps and G organized. You’ve got to know what you’re getting into.”
Best Practice #2 Pause, Re-Evaluate, Re-Assess and then Proceed
It’s tempting to dive in headfirst when the business is finally yours. However, this isn’t the best course of action.
Instead, pause, re-evaluate from an insider’s perspective now and re-assess what you discovered during due diligence before you proceed.
It’s sort of like putting everything into a simmer pot and letting it sit there while you work out the areas that deserve priority.
Summary: “I would never say on day number one or day number five to jump in and start doing. Don’t act right away.”
Best Practice #3 Let Things Simmer for 15 Days
15 days is typically how long the initial M&A settling-in period should last. During this time, it’s key to clarify fundamental issues such as:
- Roles and responsibilities
- Expectations and compensation
- Owner goals vs. employee goals
These first two weeks will give everyone a chance to communicate and be on the same page about work expectations, culture, the future, and their role in it.
Summary: “I usually say allow fifteen days for things to simmer. Figure out roles, responsibilities, employee goals, and owner goals. Also, seek to clearly understand how everybody’s operating.”
Best Practice #4 Chart Out Roles and Responsibilities Immediately
There is hesitancy from existing staff to continue with their roles as before until they have been given the green light by the buyer.
Using a one-page spreadsheet, immediately chart out roles and responsibilities and disseminate this information around employees so there is no slowdown in operations.
Knowing they have the go-ahead enables staff to continue with projects they had been previously working on and emboldens them to make proposals and suggestions when asked.
Summary: “People are afraid when a new buyer comes in, that they might step over the line. However, the minute you clarify the role chart, who’s the decision-maker for each area of the business it frees people to continue their work and not worry about being penalized.”
Best Practice #5 Limit Your Availability as an Owner
Living in such a connected world means we’re more easily accessible to others. For owners trying to focus and grow their newly merged business, this can be extremely inconvenient.
Thankfully, there’s technology you can take advantage of now to essentially reduce your availability and the number of calls (if any) you wish to take on any particular day.
In this way, you can really zero in on what needs doing without too many distractions.
Summary: “Owners have trouble saying no sometimes. But I suggest owners put in call scheduling systems that limit how many calls you take during a day so you have time to work on the business and bring it forward and up.”
Regardless of stage i.e. whether you’re still doing due diligence or you’re now in the post-merger integration phase, these are the things you should be thinking about:
Ways to integrate, delegate, eliminate, outsource or staff recalibrate each area of the target business.
By using the acronym IDEOS, you can easily remember what exactly you should keep an eye out for.
Armed with this knowledge, you’re positioned to start off on the right foot.
If you’re thinking of business acquisition and need to discuss your options with an expert, don’t hesitate to contact us.