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M and A - Managing Acquisition Integration

Scott Gunn's Profile

The process of integrating an acquired company into the treasury and finance operations of an organization is an inherently painful process.  There are people, processes, and technology involved that make not only each company integration unique, but each piece of each integration unique whether it be integrating accounts payable, accounts receivable, financial reporting or any other critical functional area. That being said, there are a few very practical pieces of advice to adhere to that can significantly mitigate the challenges to be  faced in managing an acquisition integration on the treasury and finance fronts.

An effective integration all starts with comprehensive due diligence. The more you know about the people and existing processes that you will need to address and incorporate (including the pain points being felt by people at the acquired company) the easier the integration process is to manage. The best case scenario is to become involved in the construction of the due diligence checklist and be directly involved in obtaining the information you now you will need to make an integration efficient. Easier said than done in some cases, but just inserting oneself as much as possible in the due diligence process is well worth the effort. The more issues you can identify and address before you close a deal the better off your like will be in managing the integration.

 It is critical to understand the people at the acquired company who can be your "eyes and ears" on the ground at an acquired company to be your "on site" advocate as you implement new policies and procedures. The sooner you can convince these advocates of how they are of great value after the acquisition closes the better. Of course people may need to be "cut" down the line, but if you put yourself in their shoes and show them the benefits to collaborating with you then most people will get on board to some degree. You need someone who will be honest and tell you "how things really work" as you will NEVER get this from an answer to a question on a due diligence checklist.

Along these same lines, I believe it is crucial for the acquiring company to have a full time person onsite to assist in managing the overall acquisition integration. Nothing can be more damaging to an interaction than poor communication and hostility from an acquired company that can be mitigated with a "go to" onsite person to direct traffic and manage issues.

It is also important to understand the existing relationships with banks and other key service providers and business partners at an acquired company and establish key contacts and get them on board as soon as possible as their cooperation (or lack thereof) can have a meaningful impact on the efficiency of an integration. It is best to take the time to meet with these key contacts in person, tank them for their service to the acquired company and be honest regarding how the products and services they provide will change as a result of the accquisition.                                                                          

It is evident that I view people as the key to an effective integration. The other key constituency that need to "get on board" the integration train are those at the acquiring company whose jobs and processes will change as a result of an acquisition. The integration manager should foster direct relationships between people from the acquiring and acquired company that will need to work together during the integration. A good way to foster these relationships is to let those at the acquiring company help train their counterparts at the acquired company.

 Understanding how the technology at the acquired and acquiring companies can communicate is another key to designing and managing the integration. This technology included all of the "outside" systems used such bank platforms in addition to internal technology such as ERP systems. This requires that you plan for and get the IT support you need throughout the integration process (including the due diligence).

 Once you understand the existing landscape in terms of people, process and technology at your company and the acquired company then the construction of a detailed integration plan for each piece of the integration you manage is in order. This plan should consist of  a due diligence checklist, a pre-merger task checklist, a post merger checklist, a listing of all parties to be affected by the integration, a matrix of deliverables from all parties that will be partners in the acquisition, and a detailed timeline of key deliverables.

I did promise some concise practical advice in managing an effective integration

   1. Due Diligence- get involved as soon as possible and do as much as you can
       directly.

   2. Engage allies at the acquired company

   3. Manage the dynamics of external relationships at the acquired company.

   4. Understand how the integration will change processes and procedure within
       your company and get all those who will be affected on board before you start
       making  their lives more difficult

   5. Foster honest communication and establish as many direct communication
      lines as possible between your company and the acquired company

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