In our first article in this series, we discussed why integration planning must start well before the deal is signed, ideally at the time of due diligence. Now we take a look at how you form and inform the team that will pull it off.
•Establish an integration team with clearly defined roles and responsibilities. The head of the integrated business unit should lead the integration team. Some people advocate making the integration team leader a member of the acquired company’s management team, but unless that person has been tapped to run the business unit, it rarely makes sense. The integration team leader has to be the person who is ultimately responsible for making the new business work, not just completing a smooth integration.
As the team leader is unlikely to work on the integration full-time, it is critical that he or she be supported by an integration manager who has a complete set of project management tools, checklists and systems and is experienced in the subtleties of successful acquisitions. Large companies, like serial acquirer GE Capital, have the luxury of dedicating resources to establish integration management as a full-time job that is recognized as a distinct business function, just like operations, marketing or finance. Smaller companies typically cannot afford this kind of dedicated staff. Often an executive with project management skills can fill this role, but as many mid-market companies do not have the bench strength to take a senior person out of a functional role, experienced consultants can be very useful.
The working members of the integration team should consist of people drawn from the appropriate functional areas of both companies. Teams should develop detailed written integration plans that clearly articulate integration objectives, the specific plans to accomplish those objectives, and relevant time frames and costs. The integration manager will bring the plans together into a cohesive whole and highlight conflicts, dependencies and any areas that do not support the overall objectives of the integration.
•Develop clear strategic and financial objectives for the acquisition and measure against them. So many times we see deals that are supported by extensive financial analysis demonstrating the compelling financial and strategic justifications for doing the deal; however, once the deal is closed, the analysis goes on the shelf along with the closing book.
Publishing clear strategic objectives and financial targets for the acquisition is critical to the success of the integration team. While a good integration team will find cost savings where none were anticipated and support revenue growth in unexpected ways; the team must clearly understand the acquirer’s overriding motivation for doing the deal. An acquisition that is motivated by the cost savings resulting from consolidating redundant operations will have a very different integration plan than one that is expected to yield significant revenue growth by entering new markets.
In the next part of this series, we will discuss the cultural and communication issues that often make the difference between success and failure.
