M&A Integration: Preserving Value

Integration can make or break the acquired entity. What does it mean? Every Acquisition is unique and each acquired entity has its secret sauce. That secret sauce which would have helped it grow at a good pace, retain talent, provide quick delivery for the clients, manage workforce better etc. This secret sauce is one of the key reasons (knowingly or unknowingly) why you would have considered buying the company. A blind approach to Integration might result in killing this secret sauce and hence the value of the company. Many acquisitions have faded away due to improper planning and a one size fits all mentality usually plaguing huge corporations. Now with more awareness building, and specialized teams being setup to handle M&A integrations, companies are looking at preserving the value in the acquired entity. This does not mean we do not integrate; it just means we integrate more thoughtfully and carefully ensuring we preserve the value and, in the meantime, help the parent and the acquired entities grow faster.

How can we go about integrating while preserving value? For this we need to ensure we have the right mindset. A mindset which treats the acquired entity as an equal. The parent should not go into the integration with the mindset that “I know better”. It should be an equal collaboration. Now that we have the right attitude, lets look at some steps which might help us preserve value.

  • Having an honest discussion with the acquired entity leadership, regarding what they feel helps them function the way they do. What they think they do better than others/competition?
  • Developing an integration strategy, together with the acquired entity leadership. The sponsoring business unit leadership (or representative) should also be a key stakeholder along with the post-merger integration lead. All sit together and decide on the how they envision the growth of the combined unit (Acquired entity & Parent entity). Looking at various areas of integration and what they feel they need to preserve, how soon they want to integrate and to what degree.
  • Once the strategy is ready, we look to expand on this and see what are the tools and processes within the acquired entity which create the identified value. This exercise also needs to be done jointly with the Acquired entities and the Parent entity teams, to ensure that details are not missed or wrong assumptions are not made.
  • While jointly developing the integration plan with the acquired entity, we will then look to ensure that the changes proposed do not hamper or stop the processes or tools which drive the identified value. We will also be analyzing, if say by adopting the parent entities processes, we can either retain or improve the current value creation.

In short, we first need to have the intention to preserve value within the acquired entity, followed by the identification and then planning to retain or improve on it. Let me know your thoughts, how can we help preserve the value of the acquired entity?