Successful Mergers and Acquisitions – Integration Strategy

The secret of a successful merger or acquisition isn’t as a result of the skills of the lawyers involved in the successful completion of the transaction. It succeeds, or fails, as a result of the vision and strategy behind the deal and the successful integration of the two, or more, entities long after deal completion.

So what are the key areas to work on to make sure you give your merger every chance of being a successful and value enhancing one?

Prepare and plan your integration strategy

This should start well before completion and incorporate the reasons for the merger or acquisition in the first place. Include an assessment of the commercial aspects of the two entities, the customer bases, the cultural fit and any economies of scale and/or other potential efficiency savings.

Integration team

Create an integration team to look at all aspects of the current and target business to include people and HR, IT, data, process and systems, timescales, consultation, PR and communications.

Whilst more people can be added to the team once it has been announced and progressed, the senior team, brought together in the planning stages well in advance of completion, need to meet regularly and create a project plan to deal with the work and deliver the aims and objectives of the integration. This project plan should be presented to the Board ready for sign off prior to implementation. The plan needs to ensure it is clear on what success looks like after the first week, first month, first year. Genuine successful integration is one where there is one entity, integrated at every level throughout the organisation, operating with one goal and one vision.

The people and HR

Who are the key people involved in the merged entity? Is the need to tie in any individuals critical to the success of the merger? What are the personalities an overriding values and drivers of the people in the respective organisations? How were the two cultures be combined?

IT and data

What are the IT systems in use and how will they be integrated? What data will need to be migrated? Do you have sufficient consents / permissions to migrate? The IT and the operational processes and systems, which will be unique to each organisation, will need to be harmonised. Successful integrations aim to enhance and utilise a “best of breed” approach so that there is the opportunity to learn and take the examples of best practice from both organisations into the newly integrated entity. This will help ensure the opportunities for success are maximised at every opportunity and at every level throughout the organisation. A review should encompass all the process and systems of each organisation including the suppliers, financial partners, customers, employees and any other relevant stakeholders.

Timeline

Integration isn’t an overnight or quick process. The integration plan should also include actions and activities and research in the weeks in the run-up to completion. At the outset, in parallel to the negotiations for the deal, objectives and actions need to be clearly set out for immediately before, on and after completion, day one, week one, week two and so on. In particular the first month, quarter, first half-year, first year and second year are key milestones to assess progress and success against those objectives agreed at the outset. Having a clear idea for the Board of the merged entity, and the senior integration team, as to what success looks like at each of these milestones and what needs to be done ready for and on each of those milestones will help ensure integration stays focused and on track.

Consulting

Consulting with your people and harmonising an agreed set of values for the culture is one of the most important aspects, alongside, in our experience, the right communication strategy and the right motivators for doing the transaction in the first place.

Ultimately it is the integration team that is responsible for ensuring that the goal of a successful integration are achieved.

Communications and PR

How the transaction is communicated prior to completion, on completion and on the milestones afterwards to internal stakeholders, (your people), suppliers, customers, prospect customers and the wider world and having a clear communication strategy for each of those different cohorts should be established early on in the integration plan.

For help and advice on mergers and acquisitions and creating an integration plan and team, please speak to our Corporate and Commercial team or Stephen Attree, Owner and Head of Corporate, Commercial and IP at MLP Law.