Two Tracks of Merger Repair

Mark Herndon headshot
By Mark Herndon
President, M&A Partners
Jun 28, 2017

Following up on last week’s post, Do You Need a Merger Repair?, you’ve done a Merger Repair Rapid Assessment, and determined that your most recent M&A integration efforts just didn’t get the job done. Now what?

There are two key tracks of merger repair that your management team should focus on. The first response is "emergency surgery" to address the business issues (i.e. low customer service levels, lower-than-desired productivity, lack of cost control and/or needed revenue improvement) created by an M&A integration effort that has gotten off track. What is needed in this case is to repair the business, and action must be taken quickly. This is no time for a lengthy study involving layers of people, multiple approvals and lengthy project plans.

This business needs repair and management must act fast. "Rapid action" teams, simplified executive decision-making, and 100-day projects are the key components of this first track of merger repair. The essence is to identify the critical business issues, assign a key executive to take ownership of fast solutions, task a small number of essential resources, and focus on results and results alone over an aggressive timetable. Successive iterations of business improvement follow this Merger Repair action to achieve longer-term and sustainable solutions. 

"...you have to look beyond your own internal viewpoints and historical integration experiences to discover meaningful upgrades based on what other best-in-class acquirers do that will make a real difference for your organization going forward."

Track One – Merger Repair Rapid Action Projects

Robert H. Schaffer and Ronald N. Ashkenas outline a successful approach to quick business improvement efforts in their book Rapid Results! How 100-Day Projects Build the Capacity for Large Scale Change (Jossey-Bass). To obtain successful, rapid action merger repair solutions, managers must:

  • Focus on better performance immediately
     
  • Target actual, measurable results in a strategically important area, as opposed to market research, additional analysis of the issue, and other typical responses
     
  • Use a very short timeframe
     
  • Push to introduce a new way of resolving the issue
     
  • Create direct personal accountability for each project
     
  • Use each project as a stepping stone to broader gains, not a "slash and burn" one-time event
     
  • Initiate a disciplined, well planned effort within these constraints
     
  • Build in learning and experimentation
     
  • Conclude each project at a specified time or event, and with a bridge to the next phase of the process

This approach quickly focuses management and employees on addressing key business performance issues created by an integration effort gone wrong, regardless of the type of issues you are encountering or the multitude of contributing causes.  

Track Two – Reinvent Your M&A Integration Approach

The second track of Merger Repair can be compared to a merger integration “wellness routine” that relies on meaningful changes to diet, exercise, and a variety of healthy habits to build the organization's integration muscles and future capabilities to accomplish merger integration better and better with each successive deal.

Lessons from skilled acquirers about how to build a best-in-class M&A integration capability include these imperatives:

  • M&A integration must be managed as an end-to-end business process, and throughout each phase of the deal lifecycle.
     
  • M&A integration is a competency set with specific skills that must be built throughout the organization.
     
  • The organization's M&A integration process and capabilities must be in place before the "train leaves the station" - that is, before the deal is “in flight.”
     
  • The organization's M&A integration process must be continually improved by learning from previous mistakes and successes.

These are not foreign concepts to you, but let me add a frustrating reality. Even highly experienced acquirers sometimes get in a rut and find themselves approaching each new M&A the same old way, and achieving the same sub-par results. We recently introduced the term “deal-count paradox” to describe this phenomenon where an organization gets locked-in to the “way we’ve always done it.” (For more information on the deal-count paradox, refer to Don’t Fumble on the Goal Line, and Using Clean Teams to Accelerate Synergy Capture).

For Track Two Merger Repair to be effective, you have to look beyond your own internal viewpoints and historical integration experiences to discover meaningful upgrades based on what other best-in-class acquirers do.  That’s where our M&A Partners Integration Effectiveness Index™ can help. Over the years we have worked hard to codify a set of fundamental roles, practices, processes, skills, solutions and capabilities (collectively, “Best Practices”) we believe are significant contributors to M&A integration success. These Best Practices formed the basis of inquiry in our recent survey, The State of M&A Integration Effectiveness™ 2014, the results of which were featured in a webinar sponsored by the M&A Leadership Council.

In addition to your internal process assessment, lessons learned analysis, etc., we strongly suggest you conduct a benchmark survey of your executive team, deal teams and integration teams to compare your findings against our confidential, normative database of approximately 150 other major corporate acquirers that are serious about building M&A integration capabilities as a strategic competency.

Once completed, you’ll have a clear roadmap for getting your organization's M&A integration capability to the next level of success, as well as a much greater alignment of executive viewpoints around those Best Practices that have been proven to have a direct statistical correlation to improved business outcomes. 

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