Customer Centricity
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Issue #192

Tuesday, January 28, 2014

In this edition of our newsletter, we are pleased to present the fourth article on Post-Merger Integrations authored by one of Customer Centricity's first clients, Paul Floyd, who has transitioned to the world of Business Strategy consulting including helping companies with Post-Merger Integrations. In this series, Paul shares insightful perspectives on M&A deals and what it takes to be successful at integrating new acquisitions. Enjoy!

Post-Merger Integrations – Achieving Decisive Execution
by Paul Floyd

So far in this series, we have outlined key post-merger integration success factors and discussed in detail two of these success factors: People and Integration Planning. In this article, we address the third success factor and the important aspects to consider as the execution phase begins:

  • Avoid having too much democracy; you will not be able to please everyone
  • Base decisions on facts
  • Agree on Integration Success Metrics, track them, and regularly report on the results
  • Be adaptable, flexible and open for changes as there will be “surprises” along the way

With the completion of the integration planning, you should already have in place an Integration Steering Team, a clear integration vision, an Integration Leader, approved prioritized initiatives, an integration plan, and an approach for managing and tracking the overall integration efforts. While this is a tremendous start, the challenging work now begins as the actual execution of the integration gets underway.

How do we Deal with the many Competing Integration Execution Priorities?

The Integration Leader, along with the Integration Steering Team, needs to move rapidly to get the critical projects launched and attend to the many competing actions that will need to be addressed during the early stages of the integration. This will require setting clear expectations and an understanding that everything will not happen all at once. Priorities will be based on meeting statutory and other critical requirements while being considerate of business objectives and resources. A highly effective way to keep the appropriate level of urgency and attention on the integration, while not trying to do everything at once, is to set critical and achievable objectives for Day 1, Day 30, Day 100, Day 180, and Day 360.

Day 1 – From the first day that the two entities merge, it is critical to ensure an effective launch of the overall integration efforts. The most important deliverable is to make sure a communication is sent to all stakeholders (e.g., customers, vendors, employees, shareholders) letting them know that the deal has closed and the integration of the two entities has begun. Provide background on the deal rationale, an introduction to the combined offerings of the two companies, guidance on the integration plans, assurances concerning the continued support from the company, and information they will need to efficiently and effectively do business with the company.

It is important with employees to reinforce the importance of business continuity throughout the integration and to provide information about what they can expect with the integration of the two entities along with any impacts on them (answering the question: what is happening overall, and to me?). Areas employees will be most interested in learning about include their paycheck, pay cycle, benefits, vacation/sick policy, commissions, bonus structures, layoffs, changes in assignments, and changes in reporting relationships. It is always better to be upfront with employees if changes are expected as a result of the integration. The sooner these are addressed, the more promptly people can get back to work with their day jobs and/or begin executing per the integration plan.

Day 30 – An important milestone to assure that the integration is proceeding well, critical early initiatives are getting completed and key projects are being launched. Also aligns closely with the first month financial closing for the combined entity.

Day 100 Assessment – A critical focus date to align all integration teams on the completion of the integration Quick Hits that have the highest near term impact on the success of the combined entities.  Also the initial completion of key integration projects and the closing of the first full quarter of combined finances.  A key date to do an assessment of the overall integration effort making any required adjustments. There will be surprises along the way and so it is important to be flexible and open to change as the integration progresses.

Day 180 – Most of the highest priority integration projects should be done by this point and the next priority projects should have been initiated.  Another key date to do an assessment of the overall integration effort, making any required adjustments.

Day 360 – Completion of the major integration projects should be planned by the end of the first calendar year.  There may be some efforts that extend longer especially if there are follow on project releases.  There could be integration components that are deferred or pushed into subsequent years for valid reason; however, it can be challenging to keep a company thinking in an integration mindset beyond day 360. Therefore, unless there is a reason to handle them differently, these initiatives should be rolled into the regular annual planning cycles and handled within the new consolidated organization and project framework.

How do we Track the Integration; there are Significant Objectives to Achieve?

The changes brought on by integrations have the potential to introduce confusion and uncertainty in the organizations being affected.  It is important that this is dealt with quickly and in a manner so that the customer base of the merged company is not impacted.  Agreeing and communicating the plans to the affected organizations upfront and throughout the integration is a crucial part of achieving success. Establishing clear fact based success metrics is another key component.  These metrics will vary depending on the type of integration being done, but usually have components that include tracking financials, project schedules and deliverables, completion of key actions, and measurements of customer satisfaction. These should be determined by Day 1 of the integration kickoff and tracked by the Integration Steering team until the completion of the integration efforts. An important metric usually seen with any integration is the amount of synergy achieved. Success will ultimately be measured by the ability to maintain and grow the current business while obtaining the synergy and expansion results brought forward by the integrated combined company.  The topic of synergy achievement will be included in a future article.

How do we Deal with the Expected Tension and Disagreements that will Occur?

Integrations cannot be led by consensus or as democracies, as not everyone will be pleased with every outcome. There is a need for speed with any integration and this leads to the requirement for a leader who is willing to quickly make decisions as each new challenge comes forward. It needs to be clear that the Integration Leader, supported by the Integration Steering Team, is the final decision maker.  The responsibilities of the Integration Leader cut across functional organizations and across the entities being integrated. The leader has a challenging job to balance all the various competing needs. He/she will not get every decision right, but with the support of the steering team, he/she should get most of them right, leading to a well-planned and well executed integration effort. Taking care of the people, planning thoroughly, prioritizing continuously, and being flexible to the changing dynamics of the rapidly integrating business are the keys to success.

In a future article we will explore the topic of integration synergies and how financial success is measured with Post-Merger integrations. In the meantime, if you are wrestling with an upcoming M&A deal, planning for an integration, or having current integration challenges, feel free to contact us. We are here to serve!

About Paul Floyd

Paul is an experienced technology operating executive with extensive international leadership experience and a track record for achieving rapid product and service growth on a global scale. Paul thrives on working with companies to build great products and services, and using technology to achieve breakthrough solutions for major business challenges. Paul’s experience includes large, medium, and start-up environments. Paul has led major corporate change including the evolving dynamics of a start-up and the many challenges presented by acquisitions, integrations and divestitures. He brings a strong combination of technology, business, operations, and people leadership skills to all of his engagements.

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