M&A Integration Advice
Following the completion of an M&A transaction, an integration process will generally occur whereby the acquiring company will seek to reduce costs and increase revenues across the combined firm.
Below we discuss the key factors that should be considered to ensure the post-transaction integration generates the most benefit.
Minimise Front Office Disruptions and Reductions
Customers often have ongoing relationships with front office employees whom they trust, and react to changes and disruptions, particularly if they impact personal relationships that connect them to a company or product. Changing the lines of communication can significantly disrupt personal relationships and increase the chance of customer attrition which will reduce the benefits from an acquisition or merger. Often with merger and acquisition transactions a large number of cost-synergies are realized by eradicating duplicated back-office functions, and in many cases using a portion of these savings to enhance front office customer facing roles will generate the highest level of success.
Furthermore including cuts to front office employees will likely increase the level of uncertainty and lower morale of employees in these roles. This lower morale can be transferred onto customers and will often push them to another firm, resulting in an M&A transaction not fulfilling its potential.
Build an integrated culture
If cultures clash it can be highly difficult for integration targets and strategies to be met. Prior to a transaction the culture of each workplace should be analysed and a decision should be partly made taking into account whether cultures will be able to join. Further analysis should identify influential change agents early on whom will be able to mould cultures together to work in harmony to garner the greatest amount of success for the transformed firm.
Make cuts early and be highly transparent
One of the most highly analysed factors are the cost reductions from cutting back office staff and those that have duplicated roles across the joining companies. In order to maximise success and ensure employee morale and efficiency is maintained, it is crucial to be highly transparent and act quickly in regards to reductions. If reductions are made early, and employees have certainty into the foreseeable future the transition to the new workplace is far more likely to be successful.
New business plan
Drawing a new business plan can alleviate a number of problems and also maximise the benefits when integrating an acquisition target or merging companies. A new successful business plan can outline targets for centralised efficient back office functions which may include the implementation of new technology, management and processes. Furthermore a business plan is more likely to foster success if it outlines how revenue synergies will be maxmised, this can include strategies for maintaining successful brand names, changing less successful brand names or including strategies and projections for products or services that can increase sales from cross-selling.
From the origination of an M&A deal to the integration process post transaction, significant analysis into the integration process should be undertaken. The integration plan should be dynamic, adaptable and be continually updated as new information is available and analysed as this will maximise the success of the transaction.
Find Out More
Quinn M&A’s expert team of business transaction advisors can assist you to with all of your business acquisition, divestment, and valuation requirements. Contact Quinn M&A today on +612 9223 9166 or submit an Express Enquiry to arrange a confidential no cost consultation with one of our Senior Advisors.