Boost Your Post M&A Success: Embrace Integration

Some Corporate Development leaders get so consumed by landing the deal that insufficient effort and planning go into what happens afterwards. Yet, the post-close period is a vital time to forge connections, build trust and implement the integration plan that, frankly, should have been underway long before the deal was inked. If you’re typically caught flatfooted after close, your integration playbook may need some work.

Begin Before the Beginning

While integration doesn’t start for most employees until after the deal closes, planning for it should begin during due diligence. After all, you won’t have a clear vision about the implications of the deal until you also dig into integration. Some of this inquiry will happen organically, but having a dedicated integration leader minding the process is best. At Progress, I serve as the Vice President of Corporate Development, charged with coordinating these efforts. Having an integration leader means you'll have an important contributor dedicated to advancing your acquisition strategy success. Every deal is a flurry of moving pieces, so having a talented integration professional on hand ensures the post-close integration is a productive process that puts your organization one step ahead. After all, success is far from given.

Post-Merger Integration: Minimize Risk

Deloitte reported on an analysis of Post-Merger Integration (PMI) data drawn from the world’s largest PMI database. It found 35 factors that could help predict post-merger success. These were then organized into four risk categories: Synergy risks, structural risks, people risks and project risks. The analysis showed 35% of the mergers having low risk in these four categories enjoyed a 75% success rate post-merger. Shifting two of the four categories to high risk dramatically reduced post-merger success to 27%. Making all four high risk reduced success down to 1%. Said differently, a full 65% of mergers had less than a 27% chance of success.

This harsh truth makes identifying and mitigating risk pre-close an essential task to ensure a stable future post-merger. A corporate development leader fully dedicated to integration is an invaluable resource to both find and mitigate deal-risk areas before they derail integration success.

Characteristics for Your Integration Leader

Your integration lead is a full-time contributor who manages day-to-day efforts and handles everything from information gathering and planning, to troubleshooting and execution. A Harvard Business Review study found that seven leadership qualities predicted effective M&A leaders which included the ability to:

• Motivate others
• Influence others
• Build relationships
• Develop others
• Act with integrity
• Show adaptability
• Focus on customer needs—both internal and external

Companies with leaders who performed well on all seven measures outperformed their country index by 8.4% and their industry index by 10.4%. It should come as no surprise that these are the same qualities we have on our Corporate Development team, and that I believe, make a marked and positive impact on our ability to successfully acquire companies at scale. But planning is another key to success.

Keys to Integration Planning Success

Integration planning is the set of processes and procedures governing the lifecycle of a deal from diligence to integration. The process of documenting gives you a blueprint for a repeatable path forward, complete with best practices and lessons learned. It’s also key to realizing the deal potential identified during sourcing.

Taking a holistic view of integration, the plan should include the following phases:

• Due Diligence: When investigation and planning happen
• Between Sign and Close: When integration planning kicks into high gear
• The First 100 Days: The heavy lifting of bringing people, processes, systems and culture together
• Debrief: When we document lessons learned and suggest improvements for the next time
• Up to First Year: When we operationalize the business and begin fulfilling our potential

Throughout each phase, the integration team is charged with managing the chaos, connecting the dots, serving as a hub of communication and accelerating the process to ensure decisions are made and action is taken in a timely way. While the team is focused on achieving tangible integration of two organizations, their charge extends to remaining focused on business continuity. This includes minimizing organizational uncertainty, keeping the lines of communication open and being clear about dependencies, goals and deliverables. This keeps everyone involved in the integration process aligned and gives them a clear view of what’s needed and when.

While no one likes more meetings, they’re preferable to unchecked roadblocks. Scheduling a regular cadence of meetings that engage the appropriate people in the decision making is critical. This may include a steering committee charged with strategy, timelines, and keeping track of KPIs, a workstream leader meeting where interdependencies can be explored and risks mitigated, and workstream team meetings where deliverables are identified, tactics discussed and cross-team input addressed early to avoid later pitfalls.

M&A is a complex undertaking, but effective integration planning and communication can mitigate risk and set your organization up for a productive post-close period. Having a strong integration leader helming the day-to-day operations of your deal can help ensure you’ll land among the 35% of M&A deals that result in long-term success.