Merger and Acquisition

Topics: Mergers and acquisitions, Due diligence, Management Pages: 7 (1915 words) Published: January 8, 2014
MERGER OR ACQUISITION
There are several critical success factors in a solid transition and integration plan. Utilizing the elements of a recent client success as a blueprint for developing a solid integration plan, the following key points achieved the intended results: 1. Clarify the business model - surprisingly, many of the 80% of mergers and acquisitions that fail to achieve the intended results do not clarify their business model upfront and stick to it. This is a critical success factor, as it provides a clear vision for the organization. With a clear vision, individuals not only understand where the company is headed but they also are better able to contribute to achieving the vision. In my experience with mergers and acquisitions, I've been on both sides of this equation. In one example, the acquirer provided a clear picture of the business model to the acquired; however, the management teams of the acquirer did not have the same clarity. In this case, although the business model provided significant opportunities for synergy, it did not yield the intended results due to the mixed messages and unclear business model. In another example, the acquirer had a clear business model, initially failed in execution but was able to salvage the core of the benefits by re-invigorating and focusing on the business model. Lastly, in another example, the company had a clear business model and clear execution plan and achieved the intended synergies and bottom line results. 2. Keep the transition impact as low as possible - often underappreciated yet critical to success is keeping the transition impact as low as possible throughout the transitional period. When companies keep the transition impact low on employees, suppliers, customers and other business partners, it leads to a smoother and more successful merger/ acquisition. Specifically, this means achieving the following results on a daily basis:

a.  Uninterrupted cash
b.  Uninterrupted performance for customers
c.  Uninterrupted supplier relationships and payments
d.  Retain employees, keep them informed and minimize fear
These results are often assumed (perhaps because they used to run smoothly prior to the merger/ acquisition) - never assume, as these require an intense focus and coordination to achieve. Both of these qualities are challenging in times of intense change. In my experience, whether the change is perceived as positive or negative is irrelevant - significant change itself can lead to distraction and confusion. 3. Involve and value people and relationships - as obvious as this sounds, it is often overlooked due to the intensity and workload associated with completing the merger/ acquisition. In my experience, this can be one of the most important keys to success, as people drive results. It is critical that employees, customers, suppliers, and other business partners are involved in developing and/or executing the transition and integration plan. Of course, the direction is set via the business model and Executive leadership; however, with that background and clear priorities, people will rise to the occasion and contribute to success through involvement and participation. On the other hand, if they are left outside of the process, they will likely become distracted, disgruntled and ineffective - not an ideal way to treat your #1 asset. 4. Provide constant communication - as is essential in any effective business, constant communication is cornerstone. Do not wait until everything is nailed down or approved to begin communication. By then, people have filled in the gaps with what they believe to be true, which is almost always far worse than reality. Of course, it is not feasible to provide specific information based on legal and business considerations; however it is eminently possible to provide updates on what you do know and let people know that you will continue to update them as information becomes available (and /or is able to be communicated)....
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