Promoting Value After an M&A Deal
Closing is the culmination of months, and sometimes years, of planning, due diligence, negotiations, and exhaustion.
Closing is the culmination of months, and sometimes years, of planning, due diligence, negotiations, and exhaustion. But it is not the end. It marks the beginning of an even more demanding and fraught process. Pay attention to the initial reasons for the deal by drafting an integration plan. Shifting priorities, loss of focus, and fatigue can cause inertia over time, reducing the value of the deal. Here’s how to ensure the deal realizes its full potential.
Develop a Detailed Exit Plan
The acquiring business should have a highly specific list of goals, as well as concrete action steps and a timeline for achieving these goals. This process should begin with a comprehensive due diligence process that audits the daily operations of the target business. Doing this work before closing ensures a more streamlined integration that can begin immediately.
Your integration plan should also include representatives from both companies. Ensure each knows their role, and is empowered to take steps to bring the deal closer to your end goals. Pay special attention to company culture, and be explicit about the ideal culture of the end business. Involving people who already embody that ideal culture can help you achieve your plans more quickly.
Focus on Communication and Buy-In
Communication and culture are more than just cliched buzzwords. They are vital to integration. You must practice effective, clear communication to all stakeholders. This communication must display a clear understanding of how integration will likely affect each party.
The incoming team must understand why the company was acquired. Different perspectives on the purchase may influence the approach employees take, so be unambiguously clear. Every acquisition requires talent, so you must be an ally to the talent who matters most. Include HR and the M&A team in conversations with executives from both companies. Seek input from incoming leaders, and show that you care about their well-being, not just their compliance. If you don’t, you may lose some of your most important talent.
The M&A process is maddeningly complex, even for those who have done it before. So don’t try to do it alone. Experts who have overseen dozens of processes can help promote efficiency while offering the unbiased perspective of an outsider. Experience by executives is helpful, but it’s rarely sufficient. Consider hiring an M&A expert to oversee the integration. The right advisor knows how to increase value, and can identify early warning signs of a deal that may lose value. Their outside experience brings a perspective you may not otherwise be able to access, and can help you gain the trust of people on both sides of the deal—especially when the acquired business’s team worries that the purchasing company’s leaders may otherwise dominate the process.