General Tips For a Successful M&A
Ensure that your M&A Due Diligence checklist is solid. You should start with our standard list and tweak it as a start for all deals (already customized to fit what you need to know, based on your organization), but will need to add or remove some entries, to customize it for a particular target company. You should work with each functional leader in your organization to ensure that all bases are covered.
- Start planning for integration as early as possible. It is best if general planning and team development for integration planning can start very shortly after a Letter of Intent (LOI) has been signed, in parallel with Due Diligence.
- If possible, it is ideal to assign one Due Diligence / Integration Leader to manage the due diligence process, as well as the overall integration. The leader is usually from the acquiring company, but if the companies are similar in size, it can be from the acquired company. If the deal is a merger, the leader can come from either company. It is also possible to have co-leaders, one from each company, as long as there is true collaboration. This leader should be someone in a high leadership position and is usually someone in a product or business leadership role. The bandwidth needed is dependent on the deal but is usually about 50% during due diligence and 75-100% during Integration Planning and Execution. If the same person cannot be used for both due diligence and integration, the Integration Leader will need to become involved as early as possible during due diligence, in order to fully understand the acquisition strategy, any material findings, etc.
- Assign a functional leader for each workstream established. The functions represented and therefore the number of workstreams, is dependent on the many factors and should be a decision made by the executive leadership team(s) (see the definitions page). It is best if the same leader for each workstream leads that workstream for both due diligence and integration planning / execution. For example, you’ll probably elect to have an HR workstream, so will need one HR leader to lead both the due diligence and integration planning efforts for the HR workstream. This helps with transition and makes the process more effective and efficient. The bandwidth varies but is typically 30- 50% during due diligence and 50-75% during integration planning and execution.
- Establish an Executive Steering Committee (ESC) immediately after the signing of the Letter of Intent. This committee should be made up of leadership from both companies, and generally includes the Integration Leader, CEOs, COOs, CFOs, etc., but there are generally executive representatives from HR, sales, legal and IT, as well. It’s best if the team is no more than 12 or so members. The Due Diligence / Integration Leader should report to the ESC weekly during both due diligence and integration planning / execution. Any material findings, risks, potential show-stoppers, decision points and progress should be presented, discussed and decisions made, so that these decisions can be taken back to the workstreams. It generally makes sense to have longer monthly updates that include all or select workstream leaders, so that any detailed discussions can take place.
- Include employees from both companies in the ESC and in every workstream. It is critical that there is a message of inclusiveness and collaboration from the very beginning. Be very careful not to make all leaders of the combined company from one company, even if the deal is an acquisition with one company being much larger. This sends the wrong message. Focus on skills and experience.
- Communicate as often and as much as possible to employees throughout the process (once it is appropriate to share that the merger or acquisition is happening). Lack of communication and silence sends the message that there is something going on that the employees should not know. This causes fear and anxiety, and therefore reduction in productivity. Include employees from all levels on the workstream teams. Although they should be led by more senior employees, it is critical to have the “hands-on” knowledge on all the teams.
- Always be completely honest and open in communications. The communications sub-team (usually in the Marketing workstream) should be very proactive in developing a solid communications plan (a template is included) to ensure that what is communicated is honest, open and consistent. If you aren’t able to answer questions from employees, just say that you can’t answer the question at that time and will answer it as soon as you can or have the answer. That level of honesty goes a very long way.