Strategic buyers. Private equity. Venture capital. Banks. Foreign concerns. All manner of players participate in the current acquisition frenzy. Dealogic predicts that 2015 will see a record level of acquisitions – $4.6 trillion worldwide. 3 to the 3rd’s work in this space is focused on post-acquisition integration with a smattering of work in pre-transaction financial analysis, operational due diligence, and acquisition integration planning.
Acquisition integration methods abound. Many are focused on the what – the business operations and financial aspects of absorbing the acquired into the acquirer. Best practices highlight the importance of the human capital factor in the integration process, also known as change management. Unfortunately, change management often receives no more than lip service and often includes no more than communications.
In our experience, successful acquisition integrations weave change management throughout all activities and actions. Change management spans executive alignment, stakeholder alignment, communications, training, business case development, managing resistance, and coaching & counseling.
With this in mind, we use a 5-stage Acquisition Integration approach with an overarching theme of Transformation. These post-transaction 5 stages are depicted below.
Stage 1: Mobilize: Engage all stakeholders in the acquired and the acquirer’s organizations from the front-line to the executive team; gain alignment with integration vision, strategies, and plans
Stage 2: Launch: Flawlessly execute first 90 day plans; retain key employees; retain customers; retain channel partners; develop product and technology roadmaps; re-think go-to-market actions
Stage 3: Transform: Integrate strategies, operating processes, systems, organizations, financial reporting; and G&A functions
Stage 4: Remediate: Monitor against acquisition integration critical success factors; proactively course correct and re-align integration; stabilize operations
Stage 5: Harmonize: Optimize the combined business; grow the top-line; drive out avoidable costs; realize the original deal thesis
In future 3 to the 3rd Knowledge Transfer pieces, we will further explore various aspects of acquisition integration.
For acquisitive firms, we hope the 3 to the 3rd method, with its emphasis on Transformation and its human factors, helps you as you plan and execute your acquisition integrations.