80% of the effort in Mergers and Acquisitions comes after the deal has closed. Integration is the process of executing the synergy plans and implementing any other required change.
Integration planning is informed by the Strategic Rational and Value Drivers established early in the process. These set the overall direction, and all elements of the plan must take account of this. The information gathered as part of Due Diligence provide further inputs to this planning, along with any changes to the Operating Model of the business - processes, staffing technology, locations, suppliers, etc.
Finally, special account must be given to the planning around the people impacts of the deal such as communication, retention or training.
Prior to deal closure, RitchieHogg will prepare the complete integration plan, taking inputs from the pre-deal activities such as Value Driver planning and Due Diligence, and from stakeholders across the business.
The plan will take account of:
- Integration Organisation & Governance - Determining the roles and responsibilities for delivering the deal, including functional leads, project management, and overall accountable leadership. The governance structures such as steering groups and functional reporting are established.
- Day 1 Planning - Actions to 'keep the lights on' such as payroll, key suppliers and ensuring sales channels remain active.
- Synergy Delivery - Identifying the key milestone activities to deliver the value for the deal.
- Operating Model Change - Identifying and planning the changes required for any new ways of working. This may vary on Day 1, Day 100 and for the longer term.
- Risks, Issues, Assumptions and Interdependencies - These factors and any required mitigations will be captured for project management execution.
- Stakeholder Management & Communications - Plans for addressing internal and external stakeholders are prepared.
- Financial Tracking and Reporting - Processes for capturing costs and savings are established. These feed into the financial reporting for the business, and governance structures for the integration programme.
Post-Merger Integration Programme Management
Once the deal closes, the Integration plan must be executed. RitchieHogg can provide Integration Programme Management to execute against the plan.
Your teams do not have the bandwidth to run a complex cross-functional programme, while still maintaining the operation and performance of the business. They may not have the experience of running a complex programme of this nature, and will certainly not have a background in managing integration programmes.
Our Integration experience means that you can free up your team to focus on running the business, and count on us to maximising the value from the deal, delivering it more quickly, and at a lower risk to your business.
People & Change Planning
A merger is one of the most disruptive activities a business can undertake, and this can have a major impact on the people in the company. Staff uncertainty directly leads to rumours, productivity impacts and retention issues.
Planning for how this should be managed should begin as early as possible. Core to this is regular and targeted communication - people are more tolerant of change if do not think they are being ignored.
RitchieHogg and our partners can help you plan for the staff and other stakeholder management actions required. This will include targeting communications using the right messages, timings and channels to:
- Local Communities & other external parties
Cultural change is another key factor which must be addressed. A comparison of cultures is a key consideration should be considered as part of Due Diligence, and any issues identified. Concerns may include shared beliefs, working practices, communication methods, etc.
If there is a strong cultural clash, this will have a major impact of value realisation activities, and may stop the deal achieving it's objectives. While cultural change can be managed, this is a complex and long term activity, and for SMEs it is recommended that this is avoided by careful deal selection where possible.
Redundancies are a sad fact of many acquisitions. Staff is a major cost for many businesses, and achieving synergies may mean reducing the headcount of the combined business. This is often the case where there is consolidation of back-office functions such as Finance, HR or Procurement.
RitchieHogg can prepare a detailed migration plan as part of your Operating Model Organisational Design plans. This will identify the current and future headcount requirements, and identify where it may be possible to redeploy staff, minimising redundancy requirements. This will also feed into communication planning, by setting clear expectations of what will be happening when. Do not fall into the trap of making commitments that 'Nothing's going to change'.
Retention of key staff can be another major issue in acquisitions. The uncertainty, rumour and change can mean that people who are critical to the business may choose to leave rather than deal with the situation. It is key to identify any key individuals at an early stage and ensure that actions are taken to retain them where possible. This may be simply targeted communication, or it may involve deferred retention payments or bonuses. Where it is known that people or teams will no longer be required in the future, retention payments may be required to keep them in place until this point. Retention considerations must be built into the integration plan and budget.
Integration is the least understood part of every deal. The effort and cost must not be underestimated.
RitchieHogg has the experience and capability to manage your integration programmes to drive more value, faster results and lower risk. Arrange an initial discussion to find out more: