Connecting the Dots – Part 3

Connecting the Dots – Part 3

Successful M&A secrets; mergers and acquisitions

PART THREE

This is a series of articles by BTD Founding and Managing Partner Carlos Keener

Study after study still puts the failure rate of mergers and acquisitions somewhere between 70% and 90%. Some however have managed to turn acquisition and integration into a true competitive differentiator. What makes these firms consistently successful at M&A, and what can the occasional acquirer learn from them?

A connected approach to integration: setting the stage for delivery.

The deal is signed, post-close plans are approved, and integration begins. Senior executives intuitively get the need for a co-ordinated approach and strong communications to ensure rapid integration and a return to business as usual as quickly as possible. In practice however, whether it starts the day after completion or years later, integration is typically painful, distracting and demotivating, leading to personal, organisational and financial underperformance.

Over the years we’ve supported over 50 acquisitions and integrations and have observed many symptoms but only a few root causes:

1. Insufficient focus on the initiatives that deliver deal benefits – and the delay or exclusion of all others;

2. Lack of material accountability and support for delivering these initiatives;

3. Not enough people with the right experience tasked and available to deliver;

4. Proper co-ordination of the end-to-end programme post-close (soft and hard; integration, operational improvement, communications, etc.) to ensure smooth delivery and minimum business distraction.

While some deals ultimately fail even with these in place, we’ve never seen one deal succeed – objectives met and sustained, on time, on budget – unless each of these four are properly adopted.

So what prevents these relatively simple success factors from being in place? In short: the business itself.

Before embarking on any acquisition, ask yourself:

  1. Does your organisation encourage and materially reward delivery of business change and improvement? What motivates your leaders?
  2. Are your people genuinely excited about their role in making new acquisitions a long-term success, or are they uninterested tourists or unwilling passengers?
  3. Does your organisational culture expect and encourage personal accountability alongside collaborative, apolitical teamwork?
  4. Many of your people probably have integration experience. Are they in a position to lead or contribute to the effort, both pre- and post?
  5. Are you genuinely giving your leaders time and space to deliver integration alongside their day job, or will integration be squeezed into the cracks between the ‘real work’? Who is taking some of the day-to-day load off your managers during this period?
  6. Who is ensuring that the right things are getting done at the right time, and that all the strands across the workstreams – milestones, risks, impacts, processes, communications, systems, structures, people – are known, understood and tied together? If your answer is ‘no-one’ or worse still the ‘CEO’, you’re likely to fail. Nominating an existing manager to do this as a secondary role rarely works: This individual – internal or external – must have the experience, time, and tools to do this properly.
  7. Are your people really learning and improving from one deal to the next? How is this learning actively applied to new opportunities and new people?

Carlos Keener, December 10, 2012

The full article Connecting the Dots can be downloaded as a pdf by clicking here.