Regain control of your complex integration

M&A can go from being on track to going off the rails in a few simple mistakes. 

Doing deals is complicated: Pre-deal, you need to carefully manage the expectations of the vending company’s leadership as well as your own board. Your M&A team will be co-ordinating the work and interactions between 3^rd party specialists covering tax, legal, and others. ‘Massive parallel processing’ is required for due diligence, valuation, integration planning, financing and negotiations, none of which run to a predictable timescale. Just as small problems in one area can quickly spread and distract, leading to delays and mistakes; getting that unexpected opportunity tested and baked into the deal seems equally difficult. Keeping all the moving pieces, information and people aligned and getting them to the finish line requires skill, hard work and not a small bit of luck.

And unfortunately, that was the easy part! The complexity only increases post-close, as activities to gain control of and stabilise the business take place, sometimes alongside value creation, communications and engagement activities. Oh, and let’s not forget business as usual, which has to proceed as smoothly as possible. New people, new processes, new initiatives – it’s no wonder that integration is referred to as ‘changing the engines at 30,000 feet’.

Roughly 70% of all M&A fails to add value, and in about a third of cases it actually destroys it. For all the well-established reasons, one rarely highlighted is in fact the most significant: There’s simply too much going on to keep your arms around and deliver safely. As any skier will tell you, there’s a hair’s breadth of difference between being in full control and suddenly finding that you have lost your ability to turn or stop. And it’s not just about how quickly you’re moving. M&A and integration takes place in an environment of uncertainty and unexpected change, crowded with other initiatives and priorities. You’re skiing in unfamiliar terrain full of hidden obstacles and poor visibility ahead. And you’re being pelted with snowballs. And 10 other people are holding onto your skis, trying to pull you in different directions. Getting to the bottom in one piece at all is a minor miracle in itself.

Good planning and strong project management discipline is typically cited as the best way to ensure you stay in control of your M&A journey, and this isn’t wrong. But neither is it the whole story. In fact, over-rigid adherence to a detailed integration project plan or process can become the very thing that gets you into trouble. When the landscape of leadership priorities, post-close discoveries, and business performance has changed, ‘just sticking to the plan’ usually results in disaster. Agile programme management that anticipates and adjusts to changing circumstances is a must in successful deals, pre-close and post.

But even with this in place, acquisitions and integrations often spiral out of control. The tragic irony is that a poorly-controlled pre-close process usually becomes a runaway train that accelerates to completion, even if it’s not the right deal or at the right price. Post-close, a poorly-controlled integration does the opposite, and stalls mid-flight (also not a good thing in most situations).

So how can you tell if they are in danger of losing control of their acquisition or integration, even if all you see today is clear skies and calm winds? Here are some warning signs:

1. Too much project management: Do you have an incredibly detailed project plan for integration, a project management team known for doggedly sticking to the plan, and a culture of ‘change-resistant’ project delivery? An inability to adapt your plans as you go is the first sign of likely future trouble.
2. Too little project management: The ability to change direction when necessary comes from being able to see it early, which means having good data, and the time to understand what it might mean. How clearly do you know what’s going on within your pre-deal process or post-close integration programme? Do you get insight on your integration, or just information?
3. Too many people: In any deal, you almost certainly have multiple groups, internal and external, at work – that’s to be expected. But many teams doesn’t guarantee clear accountabilities; in fact, it’s usually the reverse. Do you know who – by name – is accountable for delivering what, especially if something changes (as it most certainly will)? Who is responsible for ensuring co-ordination and sharing across the teams? If you don’t know, it’s very possible that no one else does either.
4. Too few people: Acquisitions, and even more so integrations, are typically delivered by individuals or teams who still have a ‘day job’; if there’s one worry raised by our clients, it’s insufficient dedicated While a common factor, the point is around too many accountabilities rather than too few people: Watch out for workstream leaders or project managers who simply have too many responsibilities pulling them in too many different directions. This is especially true with serial acquirers where individuals may only have ‘one job’ on the deal (such as leading HR Due Diligence), but happen to be performing that role on several deals in parallel.
5. Too many objectives and priorities: (Boards + executive teams + middle management) x two business entities = a very high number of disparate personal agendas. And nothing brings out these personal agendas like an acquisition. Even if you’re able to influence all of them to some degree, just keeping track of ‘who is really supporting which goals’ is a full-time role in itself. How sure are you that everyone is truly aligned around the same business objectives for this deal? How much time is it taking you every week to keep them all in line?
6. Too few objectives and priorities: The easiest way to lose control of the direction of your acquisition or integration is not to have a direction in the first place! Pre-close, you should have a crystal-clear, measurable set of objectives for the deal and how these support your overall growth strategy, return metrics etc. Post-close, the deal objectives as well as more detailed integration goals should be front-and-centre, guiding your operating model design for the combined business and your plans to get there. These aren’t just words on a page: They will help you prioritise and triage, and so reduce the scope and complexity of your efforts.

Good acquirers know how to keep their deal-making and integration under control by applying tools, approaches, strong leadership and experienced people. Great acquirers also understand the need to balance all three at just the right level so that they avoid making bad acquisitions, and create value post-close even when the weather changes mid-flight. If you’d like to know more about how to make sure you can stay in control of your M&A and integration, or regain that control if you feel it slipping away, give us a call.