Follow a carefully crafted post-acquisition plan that embraces all aspects of the desired integration.
Harold Resnick has earned international recognition as a leading authority and innovator in organizational transformation and leadership development.
Here he sets out guidelines for managing post-acquisition analysis.
Most acquisitions are made with the expectation that one plus one will equal three. Unfortunately, post-acquisition analysis too often reveals a result that is something less than two.
Why is this so? During the due diligence phase care is typically taken to examine the organization’s products and services, customer base, internal operations, financial performance, key talent, etc. The potential promises an exciting outcome. However, common statements after the fact illustrate a different reality. For example:
Much of the due diligence prior to the acquisition focuses on the hard facts of the acquisition that can more easily be measured: financial performance, customer base, history of organic growth, profitability, etc. Much of the difficulty after the acquisition comes from the softer side of the organization: culture, human resistance, loss of key talent, integration of work processes, etc.
The solution is to follow a carefully crafted post-acquisition plan that embraces all aspects of the desired integration. This plan employs a project approach with a leadership team dedicated to its implementation. Following are some of the key ingredients of this approach.
Depending on the nature of the acquisition process, this team may be formed in advance so that its plan and the associated costs are an integral part of the acquisition. In other circumstances, these teams cannot be activated until the acquisition has been announced.
"The strategic integration plan should be presented to the senior leadership from both organizations so that it is understood and fully endorsed."
The Acquisition Integration Team Leader should be a member of the senior leadership of the acquiring company. This person must have the availability to devote sufficient energy to this task – perhaps even a full-time assignment – for an extended period of time. Once the leader is selected, a small, integrated leadership team should then be selected to guide the post-acquisition integration work. The structure of this team will vary, but some of the functional areas that should be considered include:
It is also important to consider whether this acquisition leadership team will be comprised solely of individuals from the acquiring company or whether an integrated team should include key players from both organizations. If an integrated team is selected, it is generally preferable to have one person per function – selecting the best candidate from either organization.
This team then collectively develops the integration strategy.
The strategic integration plan should be presented to the senior leadership from both organizations so that it is understood and fully endorsed.
Once the overall integration strategy is endorsed a number of sub-teams should be created to lead the integration work, including individuals from both organizations. The leader of each sub-team should be a member of the Acquisition Integration Team. Sub-teams often include sales and marketing, operations, finance, IT, human resources and organizational development, products and services, customer service, and communications.
Each team develops a detailed implementation plan, endorsed by the Acquisition Integration Team. This ensures that the work of the various sub-teams occurs in the right sequence, guided by a master plan and approach.
The size and scope of the acquisition on the work of these teams may extend from a few weeks to several years. The Acquisition Integration Team remains active until the resulting company is performing as expected.
Cultural conflict and resistance to change are the most common causes of the failure of acquisitions to achieve their intended results. To help prevent this outcome the following actions are recommended:
The acquisition process is messy. There will be unanticipated revelations and reactions. Key actions will result in both intended and unintended consequences. It is essential that the leadership team have a clear picture of the end in mind so that the issues that emerge do not divert the process from its intended goals.