If I were your team’s coach, and this were half-time, it would be one of those “YouTube-worthy” half-time speeches. I’m pretty calm by nature, and certainly don’t cuss like a sailor or make a practice of throwing things around, but to make the following point, I’d be forced to do something dramatic to get your attention.
"How do we expect our M&A teams to capture deal value without clear, executive-level guidance on the big issues?"
Here’s what’s disturbing me: Of over 150 respondents to our survey, The State of M&A Integration Effectiveness, only 29% indicate their organizations routinely develop a comprehensive integration strategy framework before launching the integration planning process. No team can hope to win without a game plan worked out in advance by the coaches, so how do we expect our M&A teams to capture deal value without clear, executive-level guidance on the big issues? As M&A professionals, we can--and must--do better.
To be completely accurate in handling the survey data, I want to acknowledge up front that an additional 47% of respondents, a significant percentage, indicated they did “somewhat” of an integration strategy framework prior to launching integration. And that’s good! But when queried further, those respondents indicating they did “somewhat” of an integration strategy plan disclosed that in the vast majority of instances, crucially important strategic guidance was not provided when needed. That’s a sure invitation to confusion, delay and value destruction.
Frankly, this finding is surprising on a couple of levels. For quite some time now, the use of a pre-announcement, integration strategy clarification and alignment process (what we like to call a Game Day Integration Strategy Summit) has been clearly demonstrated as an integration best practice. Those that complete this step are more than twice as likely to avoid major value erosion and realize the full potential of their deals. Game Day is typically one of the most frequently cited “key takeaways” at the Art of M&A Integration executive training sessions put on by the M&A Leadership Council. Yet only 29% of organizations have successfully implemented this crucial criterion in their M&A workflow. What’s up with that, team?
Let’s go back over the “X’s and O’s” of the Game Day Integration Strategy Summit:
- Game Day is an essential bridge between due diligence and integration. For more information, please see Bridging the Gap.
- The principal objective is to efficiently present, discuss and establish initial “directional guidance” on the most important decisions or issues required to launch the integration planning effort.
- We typically suggest that Game Day take place first among only the acquirer’s executive team, and then later, conduct a similar session with the target company executive staff.
- The specific issues to address, as well as the format, timing, and pre-work requirements of a successful Game Day vary widely with the strategic objectives, requirements and complexity of each deal. At a minimum, issues to get alignment and immediate action plans around include principal value-drivers and related synergy projects; risk mitigation plans; a concept of operations – or a framework of to-be integration “working assumptions” by function, process, product or facility; essential timelines and milestones; integration governance, roles and resourcing requirements; change leadership and communications strategy; and immediate plans required to stabilize the business, customers and key talent post-announcement.
- Consider other “make-or-break” issues for your specific deal. We’ve dealt at Game Day with issues including how to handle/integrate widely divergent sales models and processes; organization design and reporting; how to handle an essential executive new-hire during the transition period; culture assessment and alignment to common high-performance cultural attributes; where should the new headquarters be located; agreeing on clear governance and authority issues between buyer and target on areas such as budgets, decision and purchase latitude; expectations of leaders; anticipated competitor response and many, many others. There’s a natural tendency to put off consideration of the big hairy issues, but those are exactly the ones you have to step up and deal with now, at least at the level you can to provide directional guidance on how we’ll get at the final solutions post-close.
- Timing is critical. For maximum results, Game Day should almost always be conducted prior to the initial deal announcement. Game Day Basics, explains in more detail, being unprepared, not aligned or without a clear and compelling integration roadmap on announcement day will almost certainly leave the door open for negative outcomes. Can you do a Game Day after initial public announcement? Of course, and we often do so on deals that are large, global or extremely complex due to uncertain regulatory approval. But, the principle remains – it is up to executives to quickly provide the focus, guidance and leadership on the issues that matter most, before launching the integration planning effort.
- Tightly manage the process. You’ll need to trust me on this point, that I’m suggesting this from a standpoint of maximizing YOUR success with Game Day and not from a self-serving motive. Use a competent external resource to run the process and facilitate your Game Day. There are too many important issues, potentially conflicting agendas, egos and not nearly enough time to fully wrestle things completely to the ground. The right facilitator will help your leadership team concentrate on the issues, mitigate potential tendencies to usurp the opportunity for other objectives, and keep the entire group focused on providing the essential directional guidance on the most important issues your organization needs to succeed with this deal.
There’s no pixie dust in M&A integration, and clearly, no one-size-fits-all solution. But when done well and combined with other essential strategies between initial deal announcement and closing, Game Day can make a huge impact. (For more information, please see Don’t Fumble on the Goal Line.