Navigating the New World of M&A & Integration

Navigating the New World of M&A & Integration

Part I: Addressing today’s burning challenges

In this post, the first of four in the series, BTD UK Partner Carlos Keener shares our clients’ perspective on immediate challenges facing M&A and integration professionals, and some thoughts on how to address them.

Despite much of the global economy shuddering to a halt, for many firms the pandemic has actually increased their M&A workload while depriving teams of their well-tested processes, methods and tools. Consolidating views from our clients and our weekly webinar series, their immediate challenges can usually be summarised as one or more of the following:

  • Working flat-out on a critical deal that’s gone too far to pause, but now progresses in a world in which traditional processes no longer work. Attempts to work creatively around process obstacles are faced with “but that’s not how we’ve always done it” or “legal simply won’t sign off on that”;
  • Conducting ‘critical-contact’ activities such as target approach, the later stages of due diligence or integration kick-offs without the ability to meet in person, visit a site or bring groups physically together;
  • Having to accelerate a decision on a ‘now or never’ acquisition opportunity already on the table to avoid a competitor – or the banks – taking ownership first;
  • Having to respond to an increased or accelerated push for benefits from a recently-completed deal to compensate for falling revenues elsewhere;
  • Being pressured to identify and offer up non-core business units or assets for immediate divestment.

While the process of M&A and integration may be going through a stress-induced phase of rapid evolution, the key success factors of M&A and integration remain unchanged: Experienced People; flexible Methods, Tools & Templates; and most of all, the right Leadership Behaviours. In dealing with these new challenges, these three factors can act as a useful focus. Let’s consider what’s driving the challenges mentioned earlier, and think of them in terms of some new ‘capabilities’ needed for this new world of M&A and integration:

Building Trust & AlignmentDeploy individuals with higher interpersonal skills and EQ (relationship-builders) to lead initial discussionsRather than simply ‘more videocalls’, build more time and activities into your process to focus on relationshipsDial up the structure and transparency; use Ladder of Inference and active challenging to ‘over-clarify’ everyone’s understanding
Addressing the Need for SpeedA more senior team – if allowed – will be able to prioritise, spot landmines and short-cut processes safelySIMPLIFY: Rethink the application based on the core purpose/intention. Actively challenge the need for each stepAsk for, and reward, creative approaches that deliver the same quality in less time; Demonstrate and insist on focus and pace
Taking More Risk (Responsibly)Balance your team with different personality types to support ‘objective’ risk-takingStrengthen metrics and boundaries defining risk likelihood and severity to improve focus on ‘high-highs’; understand your risk triggers clearlyInsist on stronger accountability for individual risks, but do not punish failure unless the risk was poorly mitigated or managed
Managing UncertaintyExperienced advisers and mentors can help triage important unknowns and root cause from the noiseFormally register, prioritise and track key unknowns and assumptions; build scenario-based plans to mitigateRequest and support scenario planning; encourage positive voicing of unknowns and ‘nagging doubts’; challenge accepted facts
Resetting ExpectationsApply people strong in ‘local’ trust and credibility to cover every key stakeholder group pre- and post-closeIncrease points and frequency of communications; demonstrate clear links between context, objectives and actions Resist deal momentum and demonstrate ability to walk away from a deal

Once today’s burning challenges are under control, organisations will need to think about how to make sure they can spot and capitalise on tomorrow’s opportunities: distressed targets, businesses already in administration, or simply companies that have become significantly more attractive in light of new market dynamics. These longer-term opportunities will be the subject of the next post in this series.

As a specialist firm with a senior team and over 20 years of experience, BTD can provide the new thinking, advice, resources and tools to help M&A, integration and divestment teams navigate the new world. If you think we may be able to help, give us a call.