High-risk M&A: Starting without an integration strategy
To eliminate major risks and realize value in your M&A deal, due diligence must be complemented with an integration plan. Is an upfront integration strategy missing from your M&A process? What risks are you taking on as a result?
By AnsaradaFri Feb 07 2020Mergers and acquisitions, Due diligence and dealmaking, Post-deal integration
Post-deal integration is a critical part of realizing value in an acquisition. However, with the hustle of due diligence, integration is often improperly planned out before a deal is closed. That leads to more risk and unrealized opportunities during the deal.
“Many companies remain unintegrated well after their acquisition date; it’s very easy for a company to get distracted from the more difficult delivery of synergies and solve more urgent operational problems,” said integration specialist, Henry McNeill.
A full and complete integration has its own lifecycle alongside the deal, and the strategy is step one. This strategy should complement due diligence, with planning commencing the moment it’s ascertained that the target is likely to pull through the acquisition process.
But it’s better late than never. If you’ve already acquired a business but remain unintegrated or partially integrated, establishing an integration strategy at this stage can still be hugely valuable in getting the process back on track.
Business leaders and their advisors may find themselves:
Within the Pathway, integration topics can go as in-depth as the acquirer wants or needs to, but even addressing them at a high-level will get the acquirer thinking through all of the potential scenarios.
The Pathway brings structure to all post-acquisition integration activities, information collection, clear accountability and ownership, workflow and progress tracking in one place. From the board down, a clear pathway from opportunity to outcome is established and managed with high efficiency.
Benefits include:
Whether you are a first-timer or an M&A veteran familiar with the challenges inherent in these processes, use the new Integration Strategy pathway to improve your integration and maximize value in your deal.
“Many companies remain unintegrated well after their acquisition date; it’s very easy for a company to get distracted from the more difficult delivery of synergies and solve more urgent operational problems,” said integration specialist, Henry McNeill.
A full and complete integration has its own lifecycle alongside the deal, and the strategy is step one. This strategy should complement due diligence, with planning commencing the moment it’s ascertained that the target is likely to pull through the acquisition process.
But it’s better late than never. If you’ve already acquired a business but remain unintegrated or partially integrated, establishing an integration strategy at this stage can still be hugely valuable in getting the process back on track.
What is an integration strategy?
A solid integration strategy will demonstrate how the synergies being delivered will accelerate business value more quickly than if the businesses had remained separate. A transformational approach – rather than a transactional one – is preferred to ensure maximum value is optimized.Why do I need one?
The risks of a failed integration multiply tenfold when integration is an afterthought, impeding the ability of the new business entity to realize the valuable synergies laid out in the initial deal.Business leaders and their advisors may find themselves:
- Unprepared for post-acquisition integration activities, leading to loss of credibility with staff, board and investors
- Lacking prioritization, resourcing, organization or staffing requirements, resulting in confusion and a lack of clarity
- Losing key personnel when staff are unsure what will happen and how they’ll fit in
- Getting sidetracked from developing and executing a coherent strategy when urgent integration activities take precedence
- Losing time and motivation, as well as business and acquisition value due to lost opportunities
Be ready sooner: Introducing the Pathway to Integration Strategy
The new Pathway to Integration Strategy is a digitized checklist and workflow allowing you to prepare earlier for the integration aspect of M&A. Having this framework laid out can give you and your team the confidence your required outcome will be achieved with fewer delays, decreased risks and more coherent communication and execution. It enables the business to ‘hit the ground running confidently’ the second the acquisition is signed, so they can realize synergies.Within the Pathway, integration topics can go as in-depth as the acquirer wants or needs to, but even addressing them at a high-level will get the acquirer thinking through all of the potential scenarios.
The Pathway brings structure to all post-acquisition integration activities, information collection, clear accountability and ownership, workflow and progress tracking in one place. From the board down, a clear pathway from opportunity to outcome is established and managed with high efficiency.
Benefits of the Integration Strategy Pathway
With the framework of the Integration Strategy Pathway to follow, dealmakers have an increased awareness of what’s involved - across all areas of the business - and exactly how they are progressing.Benefits include:
- Increased speed and delivery of synergies
- Knowledge of where the gaps are, so they can be addressed upfront
- Clear formatting and context of communications to internal & external parties
- An understanding of all issues, including important ones that are often overlooked, such as culture
- Seamless linking to due diligence information and to the Post-Acquisition Integration Pathway for execution of the integration strategy
- A holistic approach to organizational, process and technology change that takes every area into account
- Total readiness for the next acquisition, with all critical information stored and maintained
Whether you are a first-timer or an M&A veteran familiar with the challenges inherent in these processes, use the new Integration Strategy pathway to improve your integration and maximize value in your deal.
