One of the latest activities on the rise is Mergers and Acquisitions (M&A). Management realizes that the consolidation of shared services will reduce cost, while improving the organization’s reach and concentration in key strategic markets.
An improper M&A execution could lead to increased cost, lack of proper integration and ultimately, a negative impact to quality of services provides. Furthermore, since time is of the essence, delaying M&A rollout may inadvertently jeopardize the much sought-after synergies.
DUE DILIGENCE STARTS EARLY
M&A process starts with clearly identifying and communicating the guiding principles and reasons for each companies’ involvement in the process by asking:
PURPOSE:
Why is the merger being conducted (e.g., to increase volumes, increase market presence, reduce costs, or acquire specific products and capabilities)? Are there any specific or quantitative goals?
APPROACH:
What is the likely style of integration (stand-alone, absorption or best of breed)?
Will this apply to all business units and functional areas?
What budget has been set aside for the integration?
TIMING:
Will the integration be done in phases?
If so, when will each phase be completed?
Are there specific reasons for these timings, or are they just “as soon as possible”?
Identify the potential pitfalls in the deal early and clearly defining system integration costs, true shared services synergies, human resource implications and many other challenges and costs are imperative with M&A activities.
STRUCTURED PLANNING AND IMPLEMENTATION
No matter how culturally aligned the two companies may be, M&A activities will always remain complex. Start by:
Paying close attention to details of the technologies and processes to determine if the right synergies can be realized. Don’t underestimate the cultural and people issues that could potentially derail the implementation.
Hosting structured transition management workshops and producing timely and regular reports and ensuring transparency through a detailed communication plan.
Being vigilant post go-live, ensuring systems work as planned and each organization reaps the benefits sought. Tracking employee productivity and overall effectiveness of the consolidated processes are key activities in this phase.
Ultimately, the key to a successful merger is alignment of people, processes and technologies between two organizations. And no matter how strategic the merger may be, without proper alignment, the synergies may not be fully realized.
Zand, Peyman. Mon, 29 Aug 2016. “Aligning Synergies in Mergers and Acquisitions” LinkedIn.com. Retrieved from: http://tinyurl.com/jms5omj
