On September 14th Megan Murphy wrote in the FT about the delicate art of post-merger integration, highlighting the speedy moves by Nomura to integrate the European and Asian assets of Lehman Brothers. Scary! Now whether you are acquiring a Billion dollar business or a small bolt on acquisition, integrating quickly is often the key to success.
- Chair a meeting of the integration team and create a master to-do list broken down into themes including key items that arose in due diligence. Allocate a manager, for each theme. Be realistic with timetables. Break items down into executables within 30, 60 and 90 days. Below are some ideas to get you started:
- Get control of the bank accounts, including check signatories and authorization limits. Ensure all accounts are receiving the best group interest rate now that the target is part of a larger entity.
- Establish operating budgets including capex with authorization guidelines.
- Establish a new management information pack timetable. In the early stages of integration – metrics will be key.
- Review balance sheets for adequacy of provisions.
- Drive through planned cost savings quickly and effectively with clear communication. Demonstrate leadership.
- Establish a reporting structure to ensure continuing trading is seamless.
- Review reward structures to ensure continuity of management especially if an earn-out excludes some key people.
- Anomalies between acquirer and target sales commissions will require urgent action as sales teams talk.
- Do a quick and dirty review of problem employment contracts and put resolutions in place to minimize exposure.
- Organize immediate training related to closing sales and keeping customers happy.
- Establish a key meetings schedule to allow free and timely flow of information.
- Establish a clear understanding of the authority levels of the target’s leadership team.
- Deal with exposures revealed by due diligence, prioritizing those related to keeping the trains running!
- Articulate an operational plan for merging disparate systems or at least to allow them to “talk” to each other.
- Lock down the security around customer databases to ensure recent departed staff can’t access vital information.
Sales & Customers
- Ensure live deals under negotiation are not disrupted by the acquisition.
- Cleanse all sales forecasts ASAP and integrate the revised version into the group cash forecasting system.
- Review cross selling opportunities between key customers of buyer and seller.
- Communicate often and clearly with staff and key stakeholders externally, especially key customers.
- Visit key customers to articulate the strategy of the merged group and why it’s good news for that customer. (hopefully a “Lite” version of this would have been done during due diligence.)
- The sellers will have signed off on the joint press release on the deal. This is a great opportunity to motivate staff and impress existing customers with the correct tone of message.
- Set a timetable for all web site changes and allocate a webmaster to drive the project.
- Collateral may need to change to reflect the new products of the merged entity.
- Don’t miss the opportunity to articulate the enhanced business result that will be achieved for your customers due to the increased resources of the merged group.
- Draw up a detailed checklist of leases, obligations, trade contracts, employment contracts, IPR, change of control provisions and articulate any commercial issues that require decisions by the leadership team.
- Note if an earn-out formed part of the deal, there may be quite onerous conditions regarding managing the newly acquired company. These will need to be factored into the integration plan.
- Insurance and risk exposure reviews should be conducted as a high priority.
- Tax and accounting matters related to regulatory compliance may require urgent action.
Overall, the key message is to be prepared and to execute the integration with confidence. The worst thing you can do is to procrastinate. Make your acquisitions a success and remember nothing succeeds as planned but failing to plan is planning to fail.
The success or failure of any acquisition deal is governed not so much by what you buy, but what you do after you’ve bought it, and how well you do it. You have organize a great checklists. Thanks for sharing.