Paul J. Siegenthaler
Focusing on elements under Managements 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 companys
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, 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 teams 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.
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 individuals 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.