Best Practices for Successful Post-Merger Integration

By: Amy Moore

Are you resourced for an efficient and effective post-merger integration?

Few if any mid-sized companies are equipped with all the people, processes, and technology integral to achieving valuable post-close results, not to mention the ability to handle data, applications, and infrastructure to integrate the new company to drive the multiples you’re expecting.

Depending on the scope and scale of each transaction, Day 1 to Day 120 can vary greatly. Think about these six priorities when you’re planning the days that follow the close to provide a smooth handoff from the deal team to the integration team. A well-executed and communicated plan avoid delays, unnecessary costs, and long-term unfavorable consequences.

1. Document everything and assume nothing. Memorialize the value creation strategy. What is the integration approach? Where is the value? And what’s the timeframe to realize this value? When these things are defined the integration team can set the right priorities. Communicate it and then communicate it again, and again. Rinse Repeat.
2. Prioritize consistent communication between key players. The right hand needs to know what the left hand is doing. That does not mean constant meetings between every member of the M&A team, but the moving pieces – for example, the M&A leaders, Operations and the Finance team – must regularly sync. Set an expectation for communication cadence early.
3. Agree on the integration approach. Is this acquisition an absorption, holding, value creation or integration? Agreement on the end game creates a solid, common strategy, quiets the noise around non-priorities for the near term, and universally defines what success looks like in 0-90 days, 90-120 days, and beyond.  
4. Realistically assess team skills and what’s missing. In smaller companies, everyone on the integration team has a day job and few have the experience or bandwidth to handle one-time tasks and niche elements of M&A. For most companies, it’s the first time they’ve been through it and the learning curve is steep. If you don’t have time for training, consider contracting outside talent that regularly handles these types of transactions, by the hundreds, to do the job efficiently.
5. Make the target visible. What do new stakeholders expect to see for reporting? The team needs operations diligence and a plan for data amalgamation. During the time the business was privately owned, the focus can be on about tax returns and cash flow. Now regulations, covenants and compliance completely changes with the complexities of scaling the business to drive EBITDA.
6. Understand (and respect) the culture. Every transaction will affect people – employees, customers, partners, and suppliers. Recognize the impact, plan for it, and communicate what you know when you know it. Focus on the value creation for each audience.  

As early as possible, right-size the project team with a partner that understands the nuances of the middle market, has nimble processes, a broad range of knowledge and expertise, and most importantly—the ability to execute.   For help with your post-close transaction strategies, contact Amy Moore at amy.moore@CLAconnect.com or 781-402-6346.