Closing Is Just the Beginning: Key Steps to Post-M&A Success

“Of the deals that fail to meet the objectives of the buyer up to 70% can be attributed to the lack of pre-closing planning to address a smooth transition and integration post-closing.”

Identifying a company for acquisition and securing the capital needed for the deal can seem like the biggest hurdles to growing your business through M&A. But anyone who’s been through the process before can attest to just how much more complicated things are about to get after the acquisition has closed.  You can’t foresee every risk inherent in an M&A transaction, but you can minimize the impact these risks can have on the deal’s overall value. Here’s how to avoid some common M&A deal risks:

Where will the combined resources of both companies result in greater productivity and value than if they’d remained separate entities? Synergies can be realized most easily when you:

• Watch for low-hanging fruit. Score some early wins by capturing synergies that will yield the highest return with relatively less invested capital and manpower. It’s important, of course, to make sure that “fruit” is in line with the overarching goals of the deal.
• Know your customers. What can you supply them right now? What else do they need? How can this acquisition help meet that need? Knowing the answers to these questions can help you capture more revenue from your customer base.
• Retaining key employees. Avoid making wholesale workforce changes when acquiring a company. Retaining key employees lends stability and continuity and can ensure a company’s culture remains intact – which will ensure the customer base you’re acquiring also remains intact.

Integration is an incredibly complex process, and no two M&A transactions ever follow exactly the same integration path. It’s easy to overlook, but members of your due diligence team should absolutely be afforded places on the post-closing integration team. This way you can easily take advantage of their existing familiarity with the new acquisition, ensuring continuity and eliminating redundancy in the process. You’ll also want to make sure your integration team is rounded out with individuals who bring human resources and project management skills to the table.

Much is at stake during the integration process, and if not properly handled the process can lead to significant risks – including a fractured organizational culture, the departures of key employees, loss of synergies, and a decline in overall value. All of these points make the post-closing integration process, and the team entrusted with it, vital to a successful merger.

Retaining the culture of a company you’re acquiring can go a long way toward keeping team members happy and avoiding unnecessary disruptions in service during an M&A transaction. Set your new employees up for success and don’t ignore or try to downplay their concerns – their livelihood is being bought and sold, and it’s going to be a stressful time all around. Acknowledge their concerns while welcoming them to the team, and openly recognize their contributions.

All of this points to effective change management, which can help avert one of the worst byproducts of an M&A transaction: the loss of top performing employees. It’s not uncommon, once news of a pending merger or acquisition breaks, for recruiters to “hover” around a deal waiting to lure the best workers away.

Get to know the culture of the company you’re acquiring early on so that integrating that culture can be part of your M&A strategy post-closing. Spend time at the offices and worksites of the employees you’re acquiring, get to know their values and concerns, and schedule one-on-one meetings with as many of your new team members as possible.

While no M&A transaction can ever be completely without risk, taking steps like those outlined above can go a long way toward minimizing those risks.