Top Ten Breakthrough Practices in M&A

Mark Herndon headshot
By Mark Herndon
President, M&A Partners
Jul 27, 2017

What if your CEO or Chairman of the Board called you out of the blue and said, “We have to get better at M&A integration. What are the most important priority improvements we need to make to have the biggest impact on business results?”

What would you say?

“Um, I’ll get back to you on that” would probably be a career-limiting answer. So would “pat answers” about culture, communications and speed of integration. These later responses would be entirely correct, by the way, but probably wholly insufficient for the moment.

So, today let’s determine how to substantively and persuasively answer that hypothetical question and along the way, give credit where credit is due! I love celebrating client successes and believe there’s some incredibly important observations in the findings covered in today’s blog post that can support your future M&A integration success.

An extremely rich source of data in any survey is the narrative insight shared by folks who know best. Our survey, the State of M&A Integration Effectiveness™ was no different. Since we know many of the organizations and executives who responded, we can honestly say that many of these acquirers are best in class and have worked hard to get really good at M&A. We believe these efforts at building internal M&A capabilities absolutely pay off in terms of better and more consistent business result outcomes from integration, and we demonstrated these linkages in our downloadable resource, "Key Findings from the State of M&A Integration Effectiveness Survey.”

"Many were hard-hitting, truth-telling, 'guidepost-setting' kind of insights."

One of our open-response questions asked, “What breakthrough practices or lessons learned, if any, have enabled your company to be more consistently successful at integration?” We got literally hundreds of responses. Many were hard-hitting, truth-telling, “guidepost-setting” kinds of insights. Many others were tremendous confirmation of what every integrator knows and has experienced. Collectively, I think they set an agenda that most organizations can use to quickly diagnose and prioritize development objectives for the coming year.

Today’s downloadable resource, “Top Ten Breakthrough Practices,” is based on our comprehensive content analysis of each and every narrative response to this important question, and includes both the top ten categories of responses, as well as representative comments in each category. For now, let me provide some additional commentary on a few of these insights from successful acquirers who know what they are doing and consistently “get it right.” (Categories are listed by rank based on total frequency of similar inputs.)

 

1. Resources

If you’ve followed this blog or attended our workshops, it should come as no big surprise that “resources” garnered the #1 priority response to both the breakthrough viewpoint and the greatest remaining challenges viewpoint. Reported breakthroughs include: dedicating a full-time, and fully experienced integration leader; investing in a small core team of dedicated integration experts to run the Integration Management Office; and having senior-level function leaders with direct integration experience dedicated to integration at the 50-100% level with adequate functional resources support. (Also see, Business Impact of Integration Project Staffing, and Smart-Sourcing Your Integration Staffing Requirements.)

2. Integration Framework and Process

This response was very instructive and illustrates the importance of having more than just a checklist or playbook of functional tasks and milestones, commonly referred to as a “playbook.” Don’t get us wrong, playbooks are hugely important, and they showed up in our survey as the #5 most important “breakthrough.” But what comes through the input here is that a playbook isn’t enough, in and of itself. It takes a solid overall M&A roadmap or process overview robust enough to identify, define, coordinate and align all executive and functional requirements throughout each phase, objective and milestone of the deal from start-to-finish. Other comments called this the “top-level” or macro playbook and emphasized the importance of aligning on this first, in order for the more detailed functional checklists to have maximum context and impact.

3. Business Model / Value-Drivers.

Representative comments in this category include statements such as “understand the value proposition BEFORE deciding on the integration plan,” and “look beyond the segmented functional checklists to get at core capabilities and processes that must be maintained.” These comments reflect solid practices that identify, analyze and compare the key business model distinctives in each target company, and organizations that have clearly identified the post-closing “concept of operations” requirements based on what we refer to as “deal-type DNA.” In other words, success on this dimension requires an accurate understanding of the buyer’s principal objectives in acquiring each target and a clear analysis of what is unique about each specific target company so that efforts, resourcing and priorities can be specifically aligned to preserve, then capture, then leverage those unique value-drivers. (Also see, Avoiding Integration Disaster through Deal-type DNABusiness Model vs. Culture, and Focus on the ‘Vital Few’.)

4. Acquired Employee Experience / On-Boarding.

I am struck by insights in this category such as, “the overall success of the integration is largely determined in the short term by whether or not the employee on-boarding goes well.” And, “we had to learn that employee on-boarding required every bit as much planning and strong execution as any element of core operational or systems cut-over.” That’s an extremely high bar, and no doubt explains why this stands out as a priority development initiative for most.  It's a key breakthrough best practice that deserves full recognition and credit when it is done well. (Also see, Are Your My Boss?, and What Every Leader Must Understand About Change.) 

Gain Clarity of Action. Accelerate Deal Value. Empower Internal M&A Competencies.
Call us 855-862-2784 or send us a message.

Schedule a free consultation