Paul J. Siegenthaler
Integration vs. daily business
M&A can be an accelerator of growth, but it can also lead to the demise of a business if badly
executed. It matters to get things right the first time. Integrating all aspects of two companies until they blend into a seamless
organisation is not business as usual, but it is an exciting venture and one can understand why many business leaders and entrepreneurs
are keen to dig their own teeth into a programme that will transform their company. The problem is that this can lead to a dangerous
lack of focus on the underlying commercial and financial performance of the business which could adversely affect its results. Any
dip in on-going performance will cause all hands to be called back on deck, to the detriment of the integration effort. Losing the
integrations momentum will cause it to drag on, increase its cost and most probably end in failure as personal energies wear out.
majority of mergers and acquisitions fail to deliver the business case they had promised when the shareholders approved the deal,
thereby jeopardizing the company's growth strategy. A study by McKinsey estimates the failure rate to be as high as 80%. And yet,
companies that could be classified as serial acquirers repeatedly achieve a successful integration this proves that these companies
are doing something which failing first-timers seem to overlook. My involvement in numerous post-M&A integrations has revealed
the extent to which most companies ignore how much preparation can take place before the close of the deal, how much and what type
of resource is needed to carry out the task, how to organise the integration programme and, above all, how to manage the dual focus
of integration work versus day-to-day ongoing business.
Strong leadership at the helm of the organisation and a clear segregation
of duties between the integration effort and daily business are the two most single important factor of success in the companies I
The Art of business integration
I consider business integration to be an art, because it requires the combination of
skill and talent. The skill element relates to the techniques, tools and experience which contribute towards a coherent integration
process. The talent relates to leadership skills : the ability to rapidly grasp the big picture and consequences of a particular
business situation, to draw conclusions and make decisions rather than remain paralysed in analysis, and very importantly the ability
to communicate effectively and walk the talk.
The skill set required to run a successful business is partly different to that
needed to drive an effective post-M&A integration. I specialise in the latter, as a result of an evolution that saw me focus exclusively
on large scale M&A integration and business transformation initiatives since 1997, after having managed successful business during
the previous 17 years including two successful turn-arounds. Whilst my passion and key ability are now anchored in the M&A integration
space, I understand the imperatives and reality with which business leaders are confronted, and therefore adopt a pragmatic and results-oriented
approach to my work rather than force academic models onto a business.
More resource and effort than one would think at first
Many integrations fail because the effort and resources that are required for a successful implementation are usually underestimated.
Companies that are about to merge or make a significant acquisition receive abundant advice from hordes of consultants, each of them
urging their Client to take on a large number of additional resources to cope with the forthcoming surge in everyones workload. This
is viewed by many companies as a ploy to maximise the advisors earnings, and consequently their recommendations will often be dismissed.
The only way to minimise the need for additional resources is to set ruthless priorities and define precisely the scope of the integration
programme, failing which it will tend to sprawl and consume more resources or last longer both of which will result in far higher
costs than initially anticipated.
The main impact of being short on resources is that people run out of time : time to plan,
time to prepare communications, time to re-think the companys ways of working time to explain and time to listen to feedback and
Other causes of failed business integrations stem from poor cross-functional cooperation, but this is usually due to the
way the project teams are organised. There are very effective ways of overcoming this problem, which I have tested a number of times.
And finally, the key source of failure is that integrating two merging businesses is a new experience for most people : they
do not know what to expect, they have no sense of where the hurdles lie, they cannot diagnose problems that are beginning to surface
before its too late. That is why repeated experience of such situations can be of great value it provides you with that crucial
foresight and thereby avoids so many bitter regrets in hindsight : that so important if only Id known before.
My role : providing
the expertise and experience where it is needed
This is the value I can bring to company integrations during mergers or significant
acquisitions on an national or international scale. I have been there before a great number of times. I can help people prepare
and plan for the forthcoming integration, steer them through the implementation, organise them in a way that will allow effective
cross-functional collaboration and enable a thorough re-thinking of the companys processes and ways of working, set-up effective
communication and stakeholder management, and act as an effective interface between the Company and the external consultants assigned
to specific aspects of the integration.
Crucially, my focus on the integration process allows my Clients management team to
concentrate primarily on running the day-to-day business and protects it from most of the disruption many companies suffer during
a merger or acquisition.
The desired outcome is reached when in addition to delivering the business case, the
integration can have taken place in an orderly manner that has retained knowledge and key staff, has provided a number of people in
the organisation with an opportunity for self-development, and more broadly has given the organisation a level of comfort in executing
the integration that generates an appetite for future similar acquisitions and a continued acceleration of their growth.
I would be
glad to discuss this in further depth with you, exchange notes and ideas, just because I am passionate about this topic. Or we may
even decide to embark on the journey together.