Is your deal working?

A few thoughts for uncomfortable acquirers

So the point you were dreading has arrived: Your Group CEO or Board Chairman casually asks you in the meeting, “So, how is that acquisition coming along?” What do you say? Perhaps it’s going smoothly and all your synergy targets are being met on time and in budget. Perhaps it’s not quite going as planned, but you know where the problems are and you’re confident you’ll get there.
Or perhaps it’s a burning building careening over the waterfall, and now’s the time to cry for help. All three happen regularly, and there’s no shame in any of these responses.
But there’s one response that you’ll never give, even though you may be thinking it:

“I really can’t say, because I don’t actually know.”

If this is you, you’re not alone: In my conversations with CEOs and other P&L owners, many – a majority in fact – have a rough view of what’s going on (i.e. is the integration programme delivering the intended changes), but rarely do they feel able to confidently judge whether the deal is ‘working’ overall. Sometimes they even struggle to know what’s going on.
When this happens, it’s often despite (because of?) a confusion of Dashboards and Steering Committee decks at hand, none of which get to the heart of the question. You ask for more granularity, deeper data, weekly – even daily – updates, but the more information arrives, the less clear you are on the basic question: Where are we, and is this deal actually going to work?
Sometimes the problem was set in stone up-front: Do you have a deal Business Case including clear, measurable deal objectives, benefits and synergies? If not, you have a bigger problem: Go back three paces and build one, even retrospectively. You can only reach your M&A goals if you have some!
And even if deal benefits are well-tracked and reported, that’s not the entire picture, nor is it enough. Deal objectives are by default the most lagging of metrics: by the time you see the train going off the rails, it’s usually far too late to catch it and put it back on track, and the end result isn’t pretty.

To cut through the noise and give yourself some leading indicators to your long-term deal performance, adopt a broader, ‘balanced scorecard’ approach. We recommend actively measuring performance in five areas:

1. Are we hitting the merger or acquisition business case (i.e. the deal benefits and objectives), and likely to continue doing so?

2. Are we hitting our hard milestones around how the organisation is changing post-close: integrated systems, new organisational structures, rebranding etc?

3. Are our people truly coming together and supporting the new business?

4. Are our customers and business partners feeling positive about this deal?

5. Is day-to-day business being impacted by all this post-close integration and change?

If the information you receive in your Acquisition Dashboard is consistently and credibly ticking all of these boxes, well done. If it suggests that one or more of these areas is in trouble, then at least you know where to drill further and focus your efforts before it’s too late.
If on the other hand your Acquisition Dashboard doesn’t give you the full picture and the confidence you need when you next speak to that Board Chairman, you have some work to do. Otherwise, as John Harvey Jones said way back in the 1980s, “failure will come as a complete surprise rather than being preceded by a period of worry and depression”…but perhaps this is what you’d prefer?

Good business leaders know they need a clear understanding of projected deal benefits, and the ability to measure their delivery post-close. Great business leaders also know they need to have their eye on more than this if those deal benefits are ever going to be delivered.

If you’d like to know more about how to make sure your business doesn’t get a reputation for delivering deals of questionable performance, give us a call.