Nearly half of all mergers and acquisitions (M&A) fail to create shareholder value, according to Boston Consulting Group. One typical reason why is that too many agreements are focused on the deal itself and not what happens after signing on the dotted line.
Post-merger integration cannot be an afterthought. Far from it, the details of how organizations will come together are critical to any deal’s success and should be addressed far in advance of any agreement being finalized.
For leaders who have gone through an M&A transaction, hindsight is often 20/20. Even in the most successful deals, there are countless lessons learned and best practices. At Conner Strong & Buckelew, our senior leadership has key insights into what makes mergers and acquisitions successful. Below are a few key takeaways all stakeholders should keep in mind before entering the M&A process.
As early in the process as possible, it’s a good idea to bring together senior leadership from all involved parties for an in-person session to discuss the integration process at a high level. At this session, it is important that all voices, especially the selling party, are heard. No matter how the deal is technically structured, a one-sided process will start integration off on the wrong foot.
The selling party must be given a chance to voice their thoughts and concerns. These folks know the most about the business being acquired, its operations and any potential integration pitfalls that may lie ahead. In our experience, business integrations are most successful when the focus is on collaboration and making the most of shared resources.
When a deal closes, many people’s lives are affected overnight. Both the buying and selling parties are responsible for effectively communicating the news to their customers, employees and other interested stakeholders. A hasty email or one-off mailer will not suffice. Companies must clearly and honestly communicate the timeline of the integration, how employees may be affected and what changes customers can expect — if any.
It’s also often beneficial to share some key details on the rationale behind the deal. The last thing any business wants to do is upset their employees or customers. Yet too often, this communication strategy is overlooked and underappreciated by business leaders.
When two businesses come together, they typically each have their own data storage systems, employee software and customer-facing technology. One company may possess a more robust technology offering than the other. Either way, integrating the two systems can be disruptive for customers and employees. Business leaders can find the benefits in these disparate technologies by taking a few key steps:
Post-merger Integration – The Key to Successful Deals
Based on our experience navigating M&A transactions, we know the work is not over just because the deal is done. In many ways, it’s really just beginning. That’s when the hard work of integrating the organizations begins. That’s when meaningful collaboration, effective communication and successfully merging technologies really come into play. These steps cannot be an afterthought – often they’re the factors that lead to a successful M&A deal.
To learn more or contact our team, visit our M&A Opportunities web page.
Senior Vice President, Mergers & Acquisitions