Say it quietly, but late nights and long negotiations are the easy part of an acquisition. Once the deal has been agreed, the hard work really begins as the acquiring team seek to put the theory of integrating new people and different operating systems into practice.
Amy Francis, Relationship Manager at Criticaleye, comments: “Writing a legal contract that sets into motion an acquisition and then following it to the letter is relatively straightforward. The challenge is to win the hearts and minds of staff in the business that you are buying.
“This is a process that cannot be rushed or seen as a box-ticking exercise. You have to get people to understand and believe in the vision you’re setting out for the newly combined business.”
Shaun Chilton, Group CEO at Clinigen Group, comments: “We have an integration plan right from the start, with a cross-functional, small team of people that have enough seniority to make decisions. They should meet at least once a week and, in the early stages, more than once a week.”
The two leadership teams must be kept aligned. “In any acquisition, I get to know my counterpart CEO quickly. We will sit down and talk about the rationale for bringing the two businesses together. It is crucial to be straight right from the start of the post-deal process,” comments Shaun.
This keeps the potential for clashes to a minimum. “There can be some politics and cultural differences across management teams,” adds Shaun. “Fear and anxiety over what’s next, post-acquisition, can play a large part too, and so it is best for the two people at the top to be as clear as possible.”
There needs to be careful planning when it comes to ensuring important members of staff do not walk on the day the deal is done.
Mark Basham, Managing Director at BSI (British Standards Institute), says: “To date, we have been very successful at retaining key talent. Right from the start, we recognised that it was a critical success factor as our core business is all about people.
“People are encouraged to stay, not compelled. We have also been very proactive in extending our internal development programs to the new businesses, in a very targeted and deliberate way. We identify Level 2 managers within the newly acquired businesses; these people are likely to become the managers and leaders of the future.”
Communication needs to be clear and concise, otherwise rumours and uncertainty are likely to spread.
Bev White, CEO of GI Group UK, says: “Don’t assume that people know that you want them. Tell them that you bought the business because of the people that it is made up of. They need to know that their skills and their knowledge are a very important part of how you envision the collective future for both companies.”
Bev makes the point that simple changes need to be made quickly to show there is genuine intent behind the integration plans. “You should move quickly to get your new staff onto your email system so they can be reached and contacted by colleagues. Make sure that they have access to the company’s intranet or any internal knowledge site that might be available too,” she adds.
She is also clear about what should happen if it becomes apparent that some people are not going to make the journey. “If someone in the acquired company is disruptive or doesn’t fit the new culture that you are trying to instil, then you have to respectfully arrange a transition plan for them out of the business. Not dealing with the problem will cause problems and has the potential to cause a massive loss of value from the acquisition.”
There is no shortage of acquiring companies that have made such mistakes. Bev adds: “A poor foundation without building trust and good communication during the acquisition process can cause massive damage to what might otherwise have been a healthy business.
“This can result in a complete loss of faith on the part of shareholders and customers if it becomes obvious that there are problems. Speedy acquisitions are fine as long as you plan well and communicate effectively.”
Not just about people
Bringing different IT systems together is often the stuff of nightmares for acquiring teams. It’s one of the reasons why a lot of companies settle for a half-hearted job, which then needs to be redone later down the line, invariably by a different leadership team.
Roger Bayly, Managing Director at Alvarez & Marsal, comments: “A lot of business currently suffering from performance issues have gone through serial acquisitions over the previous five years.
In many cases, they have done a great job of integrating at the front, customer facing end, but they have not followed through with the back-end which has contributed to major problems later on."
It comes back to creating the right integration team. Identifying people who understand the reason for the acquisition and have the expertise to execute on the integration. Shaun says: “You have to trust a hard core of people and make sure that, from the very start, you only have those around you who can keep you sane.
“You need to surround yourself with people who will allow you to take a step back and get a clear head every now and again.”
Some of these comments were made at a recent Criticaleye Conference Call, Creating a Successful Buy & Build Strategy.
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