Paul J. Siegenthaler

Good preparation can jump-start the integration process

Far more can be prepared than most companies believe.
Making best use of the time until the deal is actually closed is absolutely key.

Looking beyond due diligence

Carrying out a thorough due diligence and negotiating fair terms for the deal with robust legal warranties is obviously a fundamental prerequisite of any successful deal : anything less is bound to result in bitter disappointment, failure and/or legal battles. Securing a fair and robust deal is the corner stone of the future business, but the construction of that future integrated business has yet to take place.
 
Whilst fully absorbed by the due diligence and deal negotiation process, the senior management of most companies omit to maintain any bandwidth to consider and prepare the integration which will follow. When a merger or acquisition calls for regulatory approval, which can drag on for several months, precious time is wasted during which detailed planning and preparation could have taken place.
 
When Grand Met and Guinness merged in 1997, deputy CEO Jack Keenan warned his startled team of senior executives: “merging is like pulling out teeth – you can do it slow and painful … or quick and painful; we shall do it quick and painful”. Speed matters: the precondition for realising a fast and successful business integration is a precise diagnosis of what needs to be achieved, and a carefully laid out implementation plan.
 
Thorough preparation to achieve speed

Preparation here means far more than a project plan and list of “Day One” tasks. The objective is to lay the ground for a fast and effective integration and pre-digest as much of the work as possible so as to hit the ground running on Day One. Failure to carry out this preparation will otherwise result in many weeks or months of apparent inactivity following the exciting news of the deal’s completion, leading to anxiety among the staff, impatience among the shareholders, both of which increase the company’s vulnerability on the market.
 
Beyond detailed planning, some of the key topics which warrant thorough preparation ahead of Day One are :
So how much preparation is enough ?
 
The answer to that question is necessarily subjective, but generally it is far more than most companies anticipate, primarily because they are generally unaware of the extent of what can be prepared and how much this will help them achieve a successful integration; but also because if they do reach that realisation, it is often too late to release and mobilise the resources required to carry out this work.
 
Companies that have some repeated experience of integrating acquisitions have a feel for the amount of effort that was required each time and pre-empt this for the next acquisition, making the whole exercise gradually easier and more successful.

But there’s always a first time. Given how much is at stake when a company makes a major acquisition or merges with another firm, it is surprising that so many first-timers embark on a journey into uncharted territory when the required experience and guidance is available on the market.   Just feel free to contact me to discuss this further if you wish. 

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