stages of development - International Business Growth Radio Network

Integration of acquired company - Jeremy Gray

21/2/2021

Jeremy Gray – 8 of Season 4 Integration of acquired company

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Integration is key to the success of your acquisition and needs to be planned from the very start of the process.

In this show we will bring the M&A process together so along with my previous 3 shows you will have a good understanding of what it takes to make an acquisition a success.

Do not make the acquisition no one wants. This includes your existing employees as well as those in the target company.
Requires a focus on integration from the very start

Why are you making the acquisition?

Technology - could be cultural issues? What is the objective of the owners of the company
Channel – What are the challenges of merging channels? How will you ensure that the opportunity is maximized
Synergies – Revenue – are the sales cultures similar? Cost – often results in employees losing their jobs? How will employees react? Existing employees have inside track. But are they best for the long term?
Synergies how will they be achieved? Have a clear plan – you are paying for them so they must be achieved
Size – Management team challenges
Culture – 3 elements – Geographic, Industry and company
Alignment – how close to your industry? The more distant the more you will need to rely on the existing target employees. Retention. How willing are you to accept change?
Site visits are valuable. Keep your eyes and ears open. Business culture, EH&S
Own team financial DD. Accounting systems. How far apart are the companies closing processes? Integrating financial systems is it critical? What is the cost?
Use a professional DD team to give you feedback on soft issues.
Forming an integration team. Start about 12 weeks before the expected close.
Integration manager – need a clear leader. As owner you need to remain close to the deal.
Involve everyone you can think of – over communication is better than under communication.
Objective is ensure that each function is fully informed about the deal, they have their questions answered and each person understands what their role will be in the integration process
Hold regular meetings – weekly will probably work. Minutes and action items circulated and reviewed at the start of each meeting.
Use a checklist to ensure every item is covered – a typical check list has 150 to 200 items on it.
Timeline helps make it manageable. Typically 6 months – 3 months prior to closing to 3 month after closing. Things will get very busy during the closing process – ensure you have the resources.
Identify key employees in the target company. If it is an asset deal they will need to sign a new employee contract. Make this a precedent to closing.

Consider retention packages.

Start communication with employees as early as possible. Make them comfortable.
Show and tell works well. Introduction lunch with all employees, individual sessions followed by dinner with management.

Owner stay or go? This is a judgement call. If possible the owner should stay, but how long?

If long term what is the management structure?
If there are going to be terminations – sooner is better than later.

Initial objective post closing – keep the company running.

Employees get paid
Customers know how to place orders
Suppliers continue to provide materials and services
This must be your focus – avoid distractions. Do not rush the integration process.
Safety must be a priority.

Set up communication paths for employees of the acquired company.