29 Jul CREATING DEAL VALUE POST CLOSE
M&A integration, challenging to deliver, yet not complicated to understand. Success comes down to a few basics. Often missed or mis-applied, they are easy to spot in hindsight. To succeed, you must keep them in sight throughout the tumult of the deal. Over 20 years, on over 100 engagements, BTD has fine-tuned its approach to integration design, planning and execution. Sharing this knowledge has created a learning dynamic. If you are preparing for your first integration, or looking to improve your own approach, this series of blogs will outline BTD’s thoughts and learnings on the basic steps. You can access the entire set of posts and podcasts in this ‘back to basics’ series here.
Step 8: Creating Deal Value Post-Close
Months of hard work designing and planning integration. A red-hot pace. The pressure of due diligence, negotiations and deal completion. An intense but successful ‘opening night’ (Day 1). Hectic change of control. OK, enough of the easy stuff; time for some real work.
If you’ve followed the previous posts in this series, you and your colleagues know what comes next and why. You now must prioritise and tackle dozens of integration initiatives. Each has its own objectives, plans, owners, teams and budgets. Your teams have identified risks, and instituted mechanisms to monitor and manage your ‘integration’. Your leaders, customers and employees understand why the deal was done, what the future business will look like, how it will be achieved, and what this means for them. If you’ve been successful, they are excited and positive. Largely. The next months will be hard work but will have a great chance of success. All you need to do is ‘run the plan’, right?
Well…yes! To a degree. Managing a post-close integration plan is in many ways very similar to any other transformation programme. Many skills and approaches apply equally well to both. So, let’s discuss what is different about managing integration programmes. The most important differences aren’t in the activities per se, but in the environment – where uncertainty, ‘strangers’ (aka new colleagues), and worries, if not outright fear, crash head-on with intense pressure to deliver change. Quickly.
New information and priorities are rife during the first few months. And even these change unexpectedly. Despite your best efforts, your messages about what’s going to change will be (or will be perceived as) different than what’s actually happening ‘on the ground.’ Your people – acquired middle management most of all – will be disoriented, stressed and often angry. You will be called a ‘liar.’ Probably more than a few times.
Not a healthy climate for success personally or professionally. Nor for happiness. To keep the ship progressing steadily in choppy waters, here are eight suggestions as you leave the relative safety of the coast:
- Facilitate, don’t police: Previously mentioned in the series, your role is to support the delivery of integration objectives and deal value by other people (see Integration Programme Governance). Usually, their new assignments proceed alongside their ‘normal’ day-to-day responsibilities. The overall effort will be more successful if they see you as helping them as individuals. Too much enforcement typically forces emerging problems back underground, reducing transparency when you need it most. Remember: You’re not managing your plan, you’re helping other people manage theirs. Adapt your approach to each workstream leader. You must be the flex in the system.
- Focus on the business, not just the programme: Acquisition benefits are important, but so is overall business performance. There’s no point delivering the first at the cost of the second. Integration impacts most areas of business operations. Most of your integration teams will be juggling BAU with integration priorities. Actively manage risks that integration poses to BAU as well as those specific to the programme. Track BAU operational metrics more closely during integration. You may even add a few leading indicators to BAU metrics.
- Keep sponsors engaged, actively: Successful integration needs informed, involved senior leadership. Their roles involve communications and conflicts resolution. Others will scrutinize their demeanour and reaction to problems for clues and cues. It’s all too easy for senior executives to be pulled away from this role, particularly when integration is going smoothly. Work aggressively to give them an active, meaningful role in Steering Committee meetings and communications. Sending an email or PowerPoint dashboard is not ‘engaging.’
- Monitor middle-managers: Integration is typically the most stressful activity of a middle-manager’s career. Regularly assess how they’re balancing integration and BAU. Help where you can. Listen far more than you talk. Try to give them some degree of certainty about the future. Be alert for signs of waning engagement or burn-out. As integration manager, your role as coach is often your most critical one.
- Maintain momentum, provide energy when needed: Elusive but important, integration momentum is as positive post-deal as deal momentum is negative pre-close. Nothing breeds support like success. Signs of trouble, by contrast, signal ‘smart people’ to abandon ship. Many integrations fail to deliver simply because they run out of energy, drifting to a stop halfway there. Adjust your delivery and communication plans to ensure visible quick wins and small successes. Demonstrate to employees and customers that things are changing for the better. For them. Create as many opportunities as possible to confirm that you keep promises. Make winners visible. And while you’re at it, become known for respecting people’s confidentiality, too.
- Connect the dots, even as they change: As each focuses on his or her initiative and business goals, someone needs to float above the fray. Understand what needs to change, spot where one group’s actions may impact another’s. No amount of ‘dependency mapping’ or clever software will replace the need for active oversight. Give yourself enough time and space to sit back at least once a week to think about what no one else will spot. But don’t do this alone: Maintain dialogue between workstreams. Focus cross-initiative meetings on actionable cross-initiative issues. Resist the pressure to preside over round-the-table gabfests.
- Scout ahead for icebergs: Do not neglect to look outside: Build in time to look ahead. Consider program and business risks. Anticipate and understand changes in business priorities or the market environment. Anticipate people challenges. Listen to your gut – it’s probably on to something: My own bruising experience is that if you hear ‘nagging voices’ in your head, it’s your own good experience screaming for attention. Have faith in yourself. Trust but verify.
- Adjust the plan to achieve agreed goals: A large part of your job is helping navigate toward the goal through treacherous waters. This will require changes to the route. Don’t overreact, but adapt. While I sympathize with “the plan is the plan, stick to it!”, this approach can quickly turn crippling in integrations. Things change, people change, priorities change. Your job is to regularly look for new, faster, better routes to your destination. No pre-integration plan is even nearly perfect. If some benefits are shown to be harder to achieve, look for others. Be prepared to occasionally (but not frequently!) suggest plan revisions. Remain small ‘a’ agile.
No integration programme goes entirely to plan. Most fail to achieve all of their goals. Too many fail to achieve most goals. BTD’s experience shows that the best way to deliver deal benefits post-close is by following the practical approach outlined in these eight posts. Our hope is that you will emerge with far more wins than disappointments.
I’d like to close this series of posts on a personal note: for you, the integration manager. Integration can be (as they say in the UK) a ‘Marmite’ activity – you either love it or hate it. There’s no middle ground. Hopefully like me you’re in the former camp. Designing, planning and managing integration programmes is an ideal training ground for executives. It exposes you to every aspect of a business from R&D to supply chain, culture to IT, strategy to people. It teaches about leadership. You will learn how to get the most out of others with their active cooperation. You will face a variety of situations and challenges unparalleled to any other activity. And you will learn to anticipate, analyse, achieve and adapt. If this all sounds exciting, then you’re in the right place. I wish you the best of luck in your endeavours. Enjoy the cruise.
As a specialist firm with a senior team and over 20 years of experience, BTD is providing the new thinking, advice, resources and tools to help businesses get the most out of their M&A, divestment and alliance activities. If you think we can help you achieve your goals, give us a call.
 For the sake of simplicity, we at BTD tend to use the term integration to refer to all post-close initiatives: integration, improvement, change, transformation etc. Integration is just one of many approaches to delivering long-term sustained value post-acquisition.
 e.g. Managing Successful Programmes; 2020, Axelos
 For those especially interested in the executive leadership role and good practices in M&A and integration, have a look at Leading the Deal; 2019, Moraitis & Keener
 Discussed in more detail in Leading the Deal, 2019, Moraitis & Keener
 If you haven’t already, try it sometime and you’ll see what I mean. Personally can’t stand the stuff…