04 Apr M&A and Integration Management Forum (March 2016) – Getting back to basics?
Another year, another excellent gathering of career professionals in acquisition and integration: The 8th TLG M&A and Integration Management Forum held in Amsterdam on 17-18 March was rated by participants as the best one yet. Over 50 participants from global corporate and mid-market organsiations gathered to discuss such diverse topics as a marketing perspective on M&A, measurement of acquisition and integration success, the role of compliance in M&A, and special challenges doing M&A integration in Africa. This year’s conference also reflected the continuing trend of in-house groups to support divestments and separations within their businesses.
But the more things change, the more they stay the same. Our pre-conference survey revealed little difference from previous years in the average number of acquisitions expected by each firm in the coming year (3-5); the geographies being targeted (North America and Western Europe); or the focus on growth as the primary purpose (especially new products and services, geographic expansion and market expansion within existing territories). The next big wave of M&A appears to remain in the distance for most. The conference’s theme – successful acquisition and integration of small businesses – also revealed continuing underperformance in firms that occasionally (as opposed to regularly) acquire businesses with fewer than 1000 employees; it does seem that, when acquiring smaller businesses, experience can make a difference.
None of this is a surprise given the general economic climate and challenges facing today’s global corporates. What is surprising however were the top challenges most firms are facing when trying to make M&A work for their businesses (%ages reflect the number of respondents citing the issue):
- Cultural Challenges between the teams (63%)
- Lack of skilled/experienced resources to support the deal and integration (53%)
- Resistance to change within the acquired team (50%)
- Complex IT alignment and integration (48%)
…and the material impact these challenges present when not addressed:
- Delays in delivering integration objectives (63%)
- Reduced employee morale (60%)
- Delays in delivering ultimate acquisition goals (55%)
Why the surprise? These issues, and the problems that result, are the same ones that have dogged M&A since ere the first acquisition was completed on God’s green earth. And this response wasn’t from a group of businesses new to M&A, but rather the opposite – firms that have been conducting serial acquisitions for decades. With years of experience of M&A inside their firms and a mature body of best practice knowledge across the corporate landscape, why haven’t these issues been put to rest?
Part of the issue certainly stems from specific, unhelpful leadership behaviours within businesses, more of which can be found in our 2014 report, Inconvenient Truths. But my discussions with people both at and outside the conference leads me to believe there remains a significant (albeit certainly not universal) gap in some of the basics around successful M&A and integration; and the availability of standard, consistently-applied approaches and tools to help people manage them: cultural assessment and alignment, programme resourcing, change management, and senior leadership engagement.
To help address these issues, BTD is conducting a number of Executive Seminars for CEOs and Divisional Directors to help executives lead successful M&A: specific responsibilities, behaviours and actions known to be critical to delivering long-term deal success; actions that separate consistently high-performing acquirers from the rest of the pack. We are also conducting 1 and 2-day Practitioner’s Training events designed to provide functional management with the fundamentals around everything needed along the entire journey, including specific methods and tools to address each of the issues highlighted above. (More details on these events can be found here). We will also be releasing our own framework and toolset, M&A Navigator, to registered users within the next few weeks. This Framework contains steps, tools and templates related to every step of the M&A and integration process, and provides guidance to help address every one of these issues.
In the meantime, what can you do to minimise the impact of these challenges, especially when acquiring smaller businesses? Alongside the conventional best practice, here are a few ideas to consider:
- Keep the M&A and integration process simple and practical; avoid unnecessary documentation and governance that will require time and resource to manage
- Engage the top acquired team in integration design and planning as soon as you can pre-close to build buy-in, understand motivations and build relationships: Make sure they understand and sign up for what’s to come
- Give your acquired business and integration project leaders help: backfill, and use outside support wherever necessary to ensure success without burnout
- Assign an ‘inside buddy’ from the acquired team to work inside the newly-acquired business to help managers interpret and prioritise requests from their new owner
- Don’t make any starting-point assumptions around integration! While ‘leave it alone’ eventually delivers little benefit, integrating ‘everything everywhere now’ is rarely the right approach. What changes will deliver deal benefit?
- Focus your engagement efforts on the individual leaders, not just the overall group; use personal diagnostic approaches (eg MBTI) to test individual working and communication styles
- Use/build simple ‘cultural snapshots’ and ’leadership readiness’ assessments to understand your new people and begin the dialogue; actively use the results to start reshaping the organisation, and your leadership expectations
- Get people working together as quickly as possible (eg on operating model design, integration planning)
- Consider alternative approaches to the ‘people’ issues, eg teambuilding, coaching etc.
Can cultural differences, leadership resistance to change and insufficient resourcing be avoided in M&A and integration? Absolutely, and in fact in most cases it can be done relatively quickly and completely – provided you take the right steps at the right time. If you’d like to learn more, give me a call.