Mergers and Acquisitions

The Approach


To be successful in Merger or Acquisition (M&A), leaders must think beyond financial matters and consider the entire M&A lifecycle, from pre-deal strategy to post-deal integration. The following is an example of an M&A lifecycle framework and a set of guiding principles for informed decision making during all phases of a merger or acquisition.

 
 

Guiding Principles

What are the key elements of a successful M&A strategy? The following are a set of guiding principles to provide the framework for making key decisions.

Clear guiding principles should be established to provide the framework for making key decisions. The following guiding principles are intended to be tailored for specific integration efforts and should be institutionalised within the integration program.

1. Leadership and ownership of the merger will be a top priority

  • Establish joint ownership of a shared vision, strategy and journey amongst the combined leadership team
  • Establish strong, sustained executive sponsorship; set tone for accountability and team work
  • Establish clear governance and decision making
  • Staff the integration team with (full-time) dedicated resources with the right skills
  • Acknowledge that the merger team will have its own organisation and objectives, which may not map to existing lines of business
  • Adapt and modify existing processes (e.g. business cases, issue resolution, decision making) to fit the needs of the merger
  • Reprioritise, as necessary, initiatives scheduled to run in parallel with the integration

2. Ensure the integration effort is aligned with strategic intent

  • Identify and understand stakeholder expectations
  • Communicate strategic reasoning throughout the organisation
  • Develop a business case and actively manage it through to the end of the integration effort
  • Base decision making on the business case
  • Set operational and financial targets to ensure value realisation; measure performance regularly
  • Understand financial market expectations; actively manage analysts, keeping their expectations in line with business case and strategic intent

3. Focus on achieving smart speed to value

  • Establish a sense of urgency; build processes to make decisions and resolve issues quickly
  • Identify the target timeframe and commit to a target environment early on
  • Don't stray from the target environment; exceptions must be supported by a business case
  • Recognise that each day of delay in the integration carries an opportunity cost; identify this cost explicitly
  • Select solutions that expedite the integration, even though they may not be the optimal, long-term end state accept 80 percent solutions
  • Prioritise for speed those areas related to the key value drivers of the merger

4. Converge to a single environment

  • Develop a comprehensive target blueprint (customers, product portfolio, systems, operations, financials)
  • Identify and implement "quick wins" that move toward a single environment early on
  • Do not mix and match solutions within a line of business, product division, or major back office function
  • Reduce complexity by taking the simplest migration path
  • Do not use the integration as an opportunity to introduce new business solutions; only change what is necessary to converge to a single environment
  • Evaluate exceptions to a simple conversion to a single environment on a case by case basis; decisions must be supported by a business case

5. Readiness and stability are critical

  • Establish readiness criteria for each phase of the integration
  • Meet criteria relating to customers, employees, operations and technology prior to implementing change
  • Monitor and manage the impact of the integration on the business
  • Ensure that plans are in place to account for any processes and/or systems that require to be de-linked from the divesting parent company

6. Communication is a constant

  • Know who are the key stakeholders
  • Understand and then manage stakeholder expectations from the beginning
  • One size does not fit all communication must be tailored for each stakeholder and for each integration event

7. Customer focus will be a key part of the integration process

  • Establish customer retention targets and processes
  • Implement "quick wins" for the customer
  • Buffer customers from merger impacts where possible
  • Make decisions that limit the cumulative change impacts on customers during the transition
  • Communicate early in the integration, as often as is truly necessary, and in an open and honest manner
  • Market aggressively to customers maintaining sales momentum is important

8. Employee focus will be a key part of the integration process

  • Establish employee retention targets and processes
  • Invest the time and effort to enable employees to make the transition to the new environment and ensure change is accepted
  • Buffer employees from merger impacts where possible
  • Make decisions that limit the cumulative change impacts on employees during the transition
  • Communicate early in the integration, often, and in an open and honest manner
  • Carry out facility closure and workforce reduction quickly and decisively ("limit the pain")
  • Establish a network that allows messages to be conveyed "face to face" where appropriate
  • Remember ultimately it is the employees who transition the customer and who deliver the benefits

9. Establish the integration effort as the path to a "better and brighter" future

  • Establish the new corporate identity, organisation and culture early on
  • Move personnel into the new organisation and under the new leadership for the combined entities as soon as possible
  • Build trust in the new combined entity through sharing information about strategies, services, products, customers, suppliers and competitors
  • Set common goals that are mutually beneficial; create opportunity and incentives for employees to have a vested interest in building the future for the new entity

(Extracts From: Andersen Consulting - http://www.ac.com)


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