Acquisition Integration

Do acquisitions typically diminish or generate value?
You may be surprised of findings that show the majority of acquisitions detract rather than add value. Why?


Fact Sheet

Studies have shown that the speed and success of the integration effort iis crucial to generating required value

Deliver not diminish value
Delivering the benefits of the acquisition may typically include cost cutting resulting in job losses, a restructure or the transition of the traditional power base. This says nothing of a change of culture, processes, goals and vision.

This sounds familiar to all of us who been through any large scale corporate transformation. The difference in a M&A is these elements are more visible, widespread and immediate.

Integration is best tackled early
A commonly held belief is integration that activities need only start when the deal is signed. This is a common mistake. During the deal phase and through due diligence predictable issues need to be tackled. The aim is avoid issues through remediating and forming joint teams as soon as possible. The lessons learned with getting joint project teams to form, storm, norm and perform are invaluable in the days ahead.
Avoid creeping changes they diminish, not generate value

Typically announcements around structure changes, reporting lines, key roles and retrenchments need to be made days, not weeks or months after the deal has been signed. Creeping changes lead to heightened fears or rumours, lower productivity, increased resistance ( passive or otherwise ) that could lead to the very resources that you were seeking to attract, leaving the organisation.

Integrate rapidly, but respectfully

It is important to execute a 100 day plan. There is no more effective way to boost morale and derive value than the delivery of short, high yield projects by a joint task force. This showcases what can be achieved in the new world. Ensure that communication emphases the goals, and context in which decisions are being made. Communication needs to be frequent, simple and personal.

The 100 day integration plan needs to executed days after the signing of the deal. It needs to incorporate any cost reduction initiatives, the merging of HR and payroll functions, the communications plan, a rollout of new corporate vision, with goals, guidelines, procedures and the alignment of compliance requirements. The deeper the integration of Finance, IT, Legal and project governance during the 100 day period, the faster the benefits of the new entity will be realised.
The teams need to be a mix of personnel and abilities from both cultures. The challenges faced in forming, storming, norming, and getting the teams to perform are in essence a microcosm of what to expect in the months ahead. It is important to carefully observe and manage team behaviours during this period.
The rapid, successful execution of the 100 day integration plan forms the cornerstone of any successful integration
The execution of the 100 day plan is the cornerstone of building the momentum of the new enterprise. It better than anything else highlights to employees what can be accomplished if everyone rallies together as one team.
Addressing cultural issues head on is the key to success in realising rapid value from any acquisition
Following the completion of the 100 day integration plan, the next step is to utilise the teams formed as well as lessons learned and cascade the process of integration and cultural change on the back of the momentum generated.
Surveys and focus groups should be formed at this stage to consolidate and streamline the process of change.
Our consultants have followed and honed this process through a number of acquisitions in Tier 1 Australian Financial institutions.

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