M&A success: Using an integration playbook to make your deal work

M&A successUsing an integration playbook to make your deal work

grantthornton.com/Playbook

2

Only about 50% of mergers or acquisitions will succeed

And even when deals go through, the newly created company may not deliver the hoped-for financial results.

Will your deal succeed?

3

Why integrations don't work

Even companies who regularly do acquisitions tend to go through itas if it were their first time. They:

• Create an entirely new process each time• Overplan• Impose too much structure• Don't build in enough agility

4

75% to 80% of integration tasks are repeatable

But success isn't as simple as having a checklist or a process template. It also takes:

Common sense The ability to prioritize tasks

The goal? A sustainable, repeatable process

5

Integration playbooks can make the difference

An integration playbook :

leverages past lessons learnedHarnesses intellectual capitalIncludes proven tools from past integrations

Want to learn more? Read the full article>

6

Humans are required

People with actual integration experience are still required to execute the playbook:• It takes experienced insights to align the vision

of the transaction with the integration process

• It also takes experience to accurately perform the risk assessment

Common sense trumps a checklist every time.

7

The integration frameworkWhat areas will you integrate?

• Accounting?• Financial reporting?• Tax?• Treasury?• ERP platform?• HR?

Merged companies often end up integrating 75% or more of functions.

• Employee benefits and insurance programs?

• Safety policies?• Sales?• Operations?• R&D?

8

Choosing an integration leader

Key integration leader attributes:

From the business unit sponsoring the transaction

Member of acquiring company’s leadership development program

Strong interpersonal and conflict-resolution skills

The respect of management

Hands-on business experience

The No. 1 challenge to creating a repeatable, sustainable process is the retention of the knowledge gained through experience.

9

Identifying risks

Risk assessment is a critical component of the process, setting the stage for mitigation plans and the resulting tasks/checklists.

Next up, 6 key risks that acquirers need to identify and address.

Want to get the big picture? Read the full article>

10

Risk #1: Infrastructure

Supporting continuous financial/operations tracking while evaluating, designing, implementing and migrating to a long-term recommendation.

Key areas of concern:• IT systems

• Accounting processes

• Internal controls

11

Risk #2: Synergy realization

Finding synergies can mean saving money post-acquisition. Ignoring synergies can mean higher risk of process breakdowns and money lost.

Take these actions:• Develop capture plans for identified sources of value

(targeted cost reductions, process improvements, changes)

• Improve operating margins by rationalizing core and noncore functions and businesses

• Rationalize noncore operations

12

Risk #3: Organizational alignment

It starts with aligning operating policies so that the merged company can hit the ground running on Day One.

Design an organizational structure that:• Enhances the combined organization's value

• Maintains focus on revenue enhancement, cost reduction and cost avoidance

13

Risk #4: Customer retention

Retaining your external relationships is an important determinant for the merged entity's future success.

Do this now:• Identify key customer, prospect and

strategic relationships

• Identify key opportunities for revenue growth

• Stabilize operations

14

Risk #5: Key employee retention

In most businesses, core employees carry key institutional knowledge and relationships.

Reduce risk by:• Identifying and retaining employees key to

commercial relationships and business continuity

• Reducing productivity decline

• Addressing potential lapses in safety during transition

15

Risk #6: Cultural alignment

Merged companies usually have different cultures and values.

Develop a new, combined culture:• Align behaviors to achieve the desired strategic

objective

• Leverage commonality, addressing the differences

• Recommend an end-to-end solution to reduce productivity decline risksRead the full article for insight

s and best practices>

16

Integration playbook benefits

• A sustainable, repeatable process• Provides the necessary intellectual

capital• Improves with continued lessons

learned• Links transaction value drivers and

vision to the overall integration process

• Identifies critical risks

Ed KleinguetlManaging DirectorTransaction Advisory ServicesGrant Thornton LLP832.476.3760 [email protected]

Daniel GalanteNational Managing PartnerTransaction Advisory ServicesGrant Thornton [email protected]

InformationContacts

Eileen HwangManagerTransaction Advisory ServicesGrant Thornton [email protected]

17