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M&A success Using an integration playbook to make your deal work grantthornton.com/Playbook
| Date post: | 03-Aug-2015 |
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M&A successUsing an integration playbook to make your deal work
grantthornton.com/Playbook
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Only about 50% of mergers or acquisitions will succeed
And even when deals go through, the newly created company may not deliver the hoped-for financial results.
Will your deal succeed?
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Why integrations don't work
Even companies who regularly do acquisitions tend to go through itas if it were their first time. They:
• Create an entirely new process each time• Overplan• Impose too much structure• Don't build in enough agility
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75% to 80% of integration tasks are repeatable
But success isn't as simple as having a checklist or a process template. It also takes:
Common sense The ability to prioritize tasks
The goal? A sustainable, repeatable process
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Integration playbooks can make the difference
An integration playbook :
leverages past lessons learnedHarnesses intellectual capitalIncludes proven tools from past integrations
Want to learn more? Read the full article>
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Humans are required
People with actual integration experience are still required to execute the playbook:• It takes experienced insights to align the vision
of the transaction with the integration process
• It also takes experience to accurately perform the risk assessment
Common sense trumps a checklist every time.
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The integration frameworkWhat areas will you integrate?
• Accounting?• Financial reporting?• Tax?• Treasury?• ERP platform?• HR?
Merged companies often end up integrating 75% or more of functions.
• Employee benefits and insurance programs?
• Safety policies?• Sales?• Operations?• R&D?
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Choosing an integration leader
Key integration leader attributes:
From the business unit sponsoring the transaction
Member of acquiring company’s leadership development program
Strong interpersonal and conflict-resolution skills
The respect of management
Hands-on business experience
The No. 1 challenge to creating a repeatable, sustainable process is the retention of the knowledge gained through experience.
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Identifying risks
Risk assessment is a critical component of the process, setting the stage for mitigation plans and the resulting tasks/checklists.
Next up, 6 key risks that acquirers need to identify and address.
Want to get the big picture? Read the full article>
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Risk #1: Infrastructure
Supporting continuous financial/operations tracking while evaluating, designing, implementing and migrating to a long-term recommendation.
Key areas of concern:• IT systems
• Accounting processes
• Internal controls
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Risk #2: Synergy realization
Finding synergies can mean saving money post-acquisition. Ignoring synergies can mean higher risk of process breakdowns and money lost.
Take these actions:• Develop capture plans for identified sources of value
(targeted cost reductions, process improvements, changes)
• Improve operating margins by rationalizing core and noncore functions and businesses
• Rationalize noncore operations
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Risk #3: Organizational alignment
It starts with aligning operating policies so that the merged company can hit the ground running on Day One.
Design an organizational structure that:• Enhances the combined organization's value
• Maintains focus on revenue enhancement, cost reduction and cost avoidance
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Risk #4: Customer retention
Retaining your external relationships is an important determinant for the merged entity's future success.
Do this now:• Identify key customer, prospect and
strategic relationships
• Identify key opportunities for revenue growth
• Stabilize operations
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Risk #5: Key employee retention
In most businesses, core employees carry key institutional knowledge and relationships.
Reduce risk by:• Identifying and retaining employees key to
commercial relationships and business continuity
• Reducing productivity decline
• Addressing potential lapses in safety during transition
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Risk #6: Cultural alignment
Merged companies usually have different cultures and values.
Develop a new, combined culture:• Align behaviors to achieve the desired strategic
objective
• Leverage commonality, addressing the differences
• Recommend an end-to-end solution to reduce productivity decline risksRead the full article for insight
s and best practices>
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Integration playbook benefits
• A sustainable, repeatable process• Provides the necessary intellectual
capital• Improves with continued lessons
learned• Links transaction value drivers and
vision to the overall integration process
• Identifies critical risks
Ed KleinguetlManaging DirectorTransaction Advisory ServicesGrant Thornton LLP832.476.3760 [email protected]
Daniel GalanteNational Managing PartnerTransaction Advisory ServicesGrant Thornton [email protected]
InformationContacts
Eileen HwangManagerTransaction Advisory ServicesGrant Thornton [email protected]
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