Paul J. Siegenthaler

Three key components :
Speed, Governance and Leadership

There is no absolute guarantee of success, but equally no excuse for repeating common mistakes that lead to failure.
Getting the fundamentals right makes a huge difference.

Focusing on elements under Management’s control

So much can go wrong in the world of mergers and acquisitions : the strategy could be ill-conceived, the hypotheses underlying the business case could be unrealistic, the broader economic, political or legislative environment could take a turn for the worse, but the implementation of the business integration is under the control of the company’s management.

Strategy consultants and industry experts can give their views and support to form a credible and cogent strategy and validate the hypotheses, general and industry sector forecasts are widely published. This leaves management with advice on how to set about integrating the businesses after the deal has closed; however, beyond the advice received from numerous parties, the accountability for actually implementing the task rests entirely with the management team.

Consequently, the wide range of external factors that can potentially ruin the best planned integration should not prevent management from putting the odds on their side by excelling in the areas which are under their complete control :

•   enabling a speedy integration
•   clear governance and disciplined programme management
•   leadership of change

Speed matters

Speed matters, because until your merging business has reached a fair degree of integration, it remains vulnerable : customers will try to cherry-pick the best terms between the two companies, competitors will want take advantage of your possible temporary lack of focus to lure your customers away and steal market share from you, and ongoing uncertainty among your staff may lead to a momentary dip in productivity. Therefore, the sooner day-to-day business can return to some form of normality, the better.
Speed means pace, not race. That fast pace is achieved through thorough preparation ahead of the close of the deal. In most cases, companies are entirely focused on the terms of the merger or acquisition deal until everything is signed-off and dusted, to the detriment of any bandwidth and management time which should be devoted to preparing the integration, so that the integration itself can kick-off as soon as the deal is closed.
This is a huge missed opportunity, because in many instances regulatory approval for the transaction may take months to obtain, and that time-span can be put to good use by working on all the aspects of the integration with the single but very important exception of commercially sensitive data, the sharing of which is strictly forbidden. This does not, however, prevent the two companies from agreeing on data definitions (for example classification and segmentation criteria of their customers, suppliers, raw materials, components, parts, standardisation of accounts etc.) and also agreeing on the processes and criteria which will be used to make important decisions, such as office locations, organisation appointments process, information systems selection etc.
Once these definitions and principles are agreed (without having shown the other party any of the actual data), both companies can begin restating their current data according to the newly agreed definitions and formats. This restatement process can take weeks or even months, but the huge advantage is that everything will be ready on “Day One” for the integration teams to start working as they will be able to compare and analyze “like-with-like” data. In the absence of this preparation work, nothing happens after “Day One” and the actual start of the integration can be delayed by several months, by which time the whole dynamic and excitement of the merger process will be lost.
Other time-consuming elements of preparation that can and should take place well ahead of “Day One” include the selection of the integration workstream team members (and their backfill in the organisation to ensure business continuity), the setting up of the team’s environment (location, systems, document repository, “house rules”), the programme governance and project management tools and processes, as well as the principles according to which the members of the integration teams will be redeployed into the business at the end of the programme.
Clear governance and discipline
Companies that have absorbed numerous acquisitions understand the value of clear governance and rigorous programme management discipline. Viewed by first-timers as classroom theory and “nice to have”, clearly laid-out rules defining the roles and responsibilities of each function involved in the integration programme, right up to the Steering Board itself, are indeed an essential condition to enable fast issue resolution. Any lack of clarity in this area will result in decisions being overturned, issues remaining unresolved and being systematically referred to the top of the company, loss of time and consequently and escalation of costs, generally leading to a failed integration.
Similarly, the number of “moving pieces” involved in a post-M&A integration call for rigorous programme management to ensure the close tracking of resources, costs, constraints and deliverables, and to maximise effectiveness in resolving issues, managing risks and coordinating activities such as stakeholder management and communications. In most cases, this will be a task for a seasoned programme manager but all too often companies entrust this crucially important responsibility to a junior individual as a “development role”. This is a very dangerous gamble as a failed integration can have serious or even disastrous consequences for the business.
Leadership of change
Let us not attempt to rewrite here the entire libraries that have been written on the role of leadership in driving effective and sustainable change in organisations. In terms of the three components I deem as indispensable to avoid failure, contrary to “Speed” and “Governance” which can be learnt and applied, “Leadership” is a form of art, in that it requires both “skill” and “talent”. The skill element relates to the models of behaviour and theories on leadership which are well documented and can be learnt. However, the “talent” aspect is dependent on the individual’s personality, character, self-assurance, clarity of thinking, edge in taking decisions, and ability to communicate effectively both verbally and in body language.
This is quite a long list of personal attributes. Chances are that the people who will be leading the business through its post M&A integration might not possess all of these qualities. In the absence of those hypothetical perfect leaders, what really matters in practice is to decide how one will compensate some of those managers’ leadership shortcomings. No two situations are identical, but the remedy is likely to be a combination of pairing up managers during communication briefings, providing the leaders with a coach or sounding board to provide them with ongoing feedback to improve their awareness and improve their impact, and helping these managers adapt their daily routine and living habits to build the mental strength and resilience they will need to cope with the prolonged pressure and stress under which they will be working during the integration journey.
Defining and agreeing the support and mechanisms which will allow the senior managers to be effective leaders throughout the integration is something that needs to take place well ahead of “Day One”, to ensure that everything kicks off to a positive start.
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