Karen Blair
Principal
Blair Consulting Group
Growth through acquisition is commonplace in today’s global economy. There have been a plethora of articles written about the business development aspects of acquisition including strategy, due diligence, deal negotiations, financing, etc. However, despite all that we know about acquisitions, 50% of these fail or fall considerably short of expectations. Why? The focus has been on the excitement around the deal leading up to the announcement and not enough on the work ensuring a successful integration.
A successful integration begins with an acquisition that is strategically sound. It must be clear why the acquisition is taking place and the business case must support the acquisition. Further, both organizations (the acquiring company and the acquisition) must be aligned with “the vision” and have a clear understanding as to how the acquisition will be successful. The management of both companies should embrace and communicate this shared vision to their organizations, generating buy-in and excitement.
One of the first steps in the formal integration process is to appoint an integration leader. Ideally, this should be done prior to the acquisition announcement. To be successful, an integration leader should be a senior leader within the acquiring company who can “make things happen” and “hold people accountable.” To support the integration leader in their efforts, a steering committee is formed to gain access to senior management. The integration leader can then work with cross-functional leadership across both companies to assemble an integration team. It is important that each team member can commit a significant part of their time and be dedicated to completing the integration successfully and meeting its goals.
From a personal vantage point, often I would arrive at the company being acquired thinking that I was going to have a pretty light schedule. Within 20 minutes of walking through the door, my schedule was full! Being empathetic will also enhance the leader’s success. I have joked that the best training for this role is being a mother. You need to be able to resolve issues fairly, i.e., break up fights, and remind people to respect one another. In other words, play nice. Last but not least, the individual taking this role needs to be willing to take a career risk. The integration leader will be asked to step out of their current role to lead the integration. While there is risk that there will not be the right role available when the formal integration is completed, it is a rare and tremendously rewarding experience for the right individual.
The formal integration process should generally be completed within 6 to 12 months. Early in the process, non-negotiable items should be addressed upfront. The non-negotiable items will likely vary by situation (e.g., employee benefit plans, regulatory requirements, etc.). The integration leader should establish goals for the overall integration and determine the degree of integration for specific functions. While some functions need to be integrated into corporate, other functions might need to stay with the acquired business. From this point on, the functional team members can establish the integration goals by function, and then specific task, time-based workplans can be completed in support of the integration goals.
Communication is critical across all integration team members and both organizations. It should be frequent and regular to assure everyone of your progress and to dispel any rumors. Weekly meetings discuss progress on workplans and timelines, and raise any issues that may delay the integration or require senior management involvement. In addition to weekly team communication, monthly steering committee meetings keep senior managers apprised of your efforts.
One critical aspect of communication that has surprised me is the importance of visibility to flush out and resolve issues. This can only be done by communicating frequently and informally with the many stakeholders in the integration process, also known as “Management by Walking Around.” As commitments are met and integration goals are achieved, the formal process of integration will draw to a close.
Once the formal integration has been completed, the process is far from over. In the normal course of ongoing business, the senior leadership will need to assess business and organizational roadblocks. The question should be asked, “Would further integration enable the business to be more successful?” If the answer is yes, then further integration should take place.
And that brings up my last point: Speed. If I were to value one key success factor above all else for a successful integration, it would be this element. Speed reduces the uncertainty and anxiety across both companies. Speed ensures that decision-making is timely and operational issues are quickly resolved. When customers experience a change in their service immediately after an acquisition, they can be quite forgiving. If they can’t make a logical time connection as to why their service has changed, many customers switch to a competitor, diminishing the value of the acquisition. In essence, speed in the integration process benefits employees and customers of both organizations.
