Two primary factors tend to drive deal under-performance: Overpaying and Limited Integration. To avoid the latter, proper planning begins in the diligence phase and all key integration items should be accomplished within 100 days of closing.
As a first step, identify an Integration Leader. That individual should have superior project management and social skills. Integration can involve literally hundreds of deliverables across a diversified set of functions. Additionally, the Leader must be adept at handling individual and cultural issues. Many times, the cultural issues will be so misaligned that outside consultants will be required to remedy.
The Integration Leader should travel along with the core diligence team. During diligence, the Integration Leader should outline the plan by function with an estimate of delivery dates. In addition, the Integration Leader should begin to identify the Functional Leaders and relevant staff. A typical structure would be as follows:
Each Functional Leader should have an identified counterpart at the target company. It is critical to engage the employees of the target company – they need to have input and it is also a time to build rapport between the teams to ensure a smooth transition. The Integration Leader should have weekly meetings with the Functional Leaders and monthly meetings with the Steering Committee. In the detailed integration plan, the Integration Leader should be mindful of incorporating the cost and revenue synergy goals and be ready to report on them at the monthly Steering Committee meeting.
During the contract phase, the Integration Team should refine plans to be able to hit the ground running post-closing. Of paramount importance is the new organizational structure. High risks exist of losing key individuals, if they do not know where they stand in the new organization going forward. And make a promise to over-communicate with regards to all stakeholders (customers, employees and suppliers) as best as possible.
Similar to getting a deal done, momentum is the key to a successful integration. Accomplishing the tasks within 100 days will keep everyone’s focus along with rigor of the weekly team meetings and Steering Committee oversight.
Sun Acquisitions is a Chicago based M&A firm specializing in helping businesses confidentially buy and sell privately held firms. Our team is comprised of certified business intermediaries with deep transactional knowledge and experience across a broad range of industries. Our Advisors have experience working on hundreds of due diligences for small and middle market transactions.
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