Each merger, acquisition, collaboration, partnership or alliance differs. So companies that adhere to a jaded integration playbook cannot hope to make game changing moves. The same deal team using the same playbook and tools can get it wrong. Like any other corporate feature, integration requires the means to build agility and strength. Companies contemplating acquisition deals can learn from serial acquirers like the IBID acquisitions team. Active acquirers like the IBID acquisitions group do not rely too much on standard approaches. There is no magic bullet in a risk filled environment where deals are increasing in size, complexity and focus on revenue growth, not just cost synergy.
Serial acquirers are also agile, tailoring their approach to integration as per the specifics of every deal. To understand when, whether and how merger and acquisition companies tailor their approach to integration, the IBID acquisitions team offers unique perspectives and insights.
Tailoring as Per Deal Rationale
Top merger and acquisition performs tailor approaches to focus on sources of value creation and deal rationale. This is more so for performers pursuing different types of deals, as different sources of value require integration approaches that differ. Goals and integration requirements look different for deals for consolidating company presence in markets that are mature, expanding to different geographies or placing fresh bets on new businesses. Low performers are likely to follow a standard approach rather than adapting to specifics of the deal.
Specifically, the IBID acquisitions team indicates that factors need to be considered to tailor the integration approach. Moreover, the culture of targets and acquirers differ considerably, the value they stand for and the manner in which tasks are carried out are different. For acquihires where the target company has to adapt to a new culture, change marketing direction or rebrand, it is essential to focus on integrating companies that differ markedly in basics like business focus, size or culture. Top performers stress on how change management plays a critical role here.
Customizing approaches to different dimensions of integration are important. The way the integration effort is coordinated and the manner through which the organization functions is important. It is essential to know what to integrate and to what degree. Speed and pace are other considerations as it shows how fast one can go and how coordinated efforts are. Culture and talent considerations are essential for managing people.
Structuring Integration Teams
Top performing M&A companies such as the IBID acquisitions team adjust allocation of authority when it comes to decision making between target management and acquirer to fit deal objectives. The structure of the leadership of integration teams to help meet objectives is important. Large deals require building a fresh culture and fostering collaboration. Integration management teams might include leaders from the companies in a innovation culture, fostering decision making that benefits one and all.
Strong Global Presence
A stronger international presence is essential for an effective post-merger integration. You have to be an acquisition company that values diversity and achieves cost synergies as well as retention of top talent in order to succeed. Target executives gain considerable leadership responsibility both during and after an integration. Target executives lead the integration efforts and combined companies rapidly realize synergies, increasing market share and retaining critical talent.
Scope of Integration
Tailoring the breadth and depth of integration for critical capabilities like research and development, sales and marketing and product development is essential. Deals need to access fresh technologies or even enter high tech product areas and for this reason, integrating fully to bring acquired companies to new levels is essential. When large, mature industrial groups like IBID Holdings acquire innovative target companies, the aim is to always nurture the target’s unique capabilities. This is why the IBID team follows an acquihire model. Achieving cost synergies and retaining top talent benefits, the acquihire is completely suited to the needs of acquisition companies who want to promote a culture of innovation. The integration process should lose no key employees and increase revenue in a declining market.
Speed and Pace of Integration
Integrating quickly does not always maximize value. Leading performers need to consider deal specifics before taking into account as to which systems and processes to maintain, the period of time taken to evaluate alternative systems to find the right answer, proceeding forward with integration and pacing the function of integration into each organization. To capture cost synergies, companies need to take decisions on talent organization and selection before closing, executing the deal right after the close and integrating the target into the acquiring company’s systems and processes without slowing down opportunities for both the organizations. Essentially, the focus is on aligning with the deal’s source of value as failure to do this can destroy key capabilities or slow down business momentum.
Considering Talent and Culture
Top M&A companies, according to research by McKinsey, need to consider how to tailor decisions on which employees align and retain company culture. Aligning cultures and averting a clash is essential for integrating successfully. In transformation deals, integration approaches include broad retention programs and measures to protect the target culture. To improve the target’s under-performing operations by introducing superior processes and strengthening management, integration efforts capture cost synergies and fold remaining target employees into the culture and structure of the acquiring company.
For any deal to be successful post the acquisition, when it comes to integration, you need to understand the reasons for acquisition of targets, the distinctive capabilities that add value to a target, and vice versa, how the deal creates value for example, increasing sales, cutting costs and leveraging capital. Integrating different departments, functions and market reach also needs to be considered. Ultimately, the aim is to create a wider perspective of integration and focus on what drives the target company towards growth.
As the IBID Group works on creating a deeper understanding of what drives target companies to successful integration, its demonstrable track record in achieving effective meshing of cultures, points to the immense value of its insights. Post merger integration needs on creating cultures that blend instead of colliding, and the speed and pace as well as steps for integration need to be just right. This is what drives the organizations merging towards success once the acquisition deal is inked.