Michael Maas is a successful manager and entrepreneur who, over a 20 year period, helped build and grow two different companies in the video game sector to USD300 million in annual revenue each year. Michael now coaches CEOs and entrepreneurs as a partner of CEO Coaching International.
Below are Michael’s 10 tips for merger or acquisition integration success.
Mergers and acquisitions are two common occurrences in the business world. But what exactly are mergers and acquisitions? The two terms are commonly confused, as they both have to do with the joining of two companies. However, the difference lies in how these two companies join forces. Let’s break it down:
- Through a merger, two separate companies join together to create an entirely new organization with a new structure and ownership.In most cases, the companies that merge together are typically the same size and scope, and join forces to either boost profits and revenue, tap into a new market, or reduce operational costs.
- Through an acquisition, one company takes over another company.When a company is acquired, a new company isn’t formed. Rather, the smaller-sized company is dissolved and becomes part of the larger company, or it might be allowed to operate independently. The goal for the larger company is usually to reduce costs, get new product lines, or reduce competition, as this process is typically cheaper than investing in research and development.
Over the years, the terms mergers and acquisitions have gained negative connotations, which led to corporate restructurings to use the term mergers and acquisitions (M&A) in conjunction. However, no matter the circumstance, mergers and acquisitions can be a lengthy and costly process.
It’s essential for there to be due diligence in mergers and acquisitions to ensure the process goes smoothly. Below, we’ll provide mergers and acquisitions strategies that you can use to ensure a successful transition.
Tip #1. Understand the M&A process
One of the keys to successful mergers and acquisitions is recognizing and adopting the mindset that any M&A effectively results in a new organization. Redevelop a start-up mindset and work ethic to ensure a complete and successful integration.
Tip #2. Communicate the M&A with stakeholders
It’s essential to communicate to each group of stakeholders the reasons behind the M&A and the value and associated costs it will bring to each group. Getting buy-in from everyone impacted is an important step toward optimizing benefits and minimizing costs, and leads to a more integrated outcome.
When communicating the M&A with stakeholders, it’s important to be transparent. Throughout the process, make sure to provide regular updates regarding your current status in the merger or acquisition. This means providing information on how you’re going to finance the operation, details about the organization being merged or acquired, the search criteria you used to pick a target company, and more. With this information given to stakeholders, they’ll be more confident in the process and back your decisions.
Tip #3. Keep integration ownership at the highest level
While it’s smart to include all the key players, you as the CEO or President should drive the process and lead the group. This step of the process can be challenging, but as the leader, it’s your job to take ownership of the integration plan.
To carry out this merger tactic, provide clear explanations about the decisions you’ve made, such as your acquisition strategy, any tax advantages, the type of acquisition, how the transaction will take place, and more.
Tip #4. Create an integration plan
An integration plan must contemplate and include all facets of the respective businesses, operations, organizations, and cultures; and should be measurable in the following increments: 30/60/90/180 days. To create an integration plan, it’s important to start with a Letter of Intent (LOI), which is a non-binding agreement that outlines the details of the transaction. Once the LOI is accepted, the next step of the integration plan can take place, which is due diligence.
Due diligence in mergers and acquisitions is essential, and consists of the analysis of the target company, both internally and externally. Due diligence in mergers and acquisitions can include:
- Reviewing corporate information:This includes inspecting the target company’s assets, liabilities, contracts, insurance, licenses, intellectual property, and more.
- Analyzing employees:During this step, study the target company’s workforce, including their job satisfaction and productivity.
- Double-check financial documents:Ensure all financial documents are in order and that the figures line up with the organization’s valuation.
- Conducting searches:It’s important to ensure the company you’re considering acquiring is in good standing. This means conducting searches to uncover any tax liens, litigation, bankruptcies, fixture filings, and IP searches.
Due diligence in mergers and acquisitions can help identify any issues that may arise after the merger or acquisition takes place. Make sure to do this step thoroughly to ensure a successful M&A.
Tip #5. Delegate tasks accordingly
Another key to successful mergers and acquisitions is assigning individuals or teams (with a designated team leader) ownership of every item on the plan. The individual accountability that comes with ownership is critical to successfully executing an integration plan.
As a leader, one of your primary responsibilities is knowing how to effectively delegate responsibilities across your organization. You can’t take on every task yourself, especially with tasks as big as a merger or acquisition. Take time to look through your senior leadership team to identify their strengths and weaknesses. What tasks can they handle? Do they have any additional experience that can help? Identifying key players that can make your merger or acquisition go smoothly will make the process much more manageable and keep stakeholders happy.
Tip #6. Develop tools to assess progress of the plan
Both stakeholders and your staff are going to want to be informed about the status of the merger or acquisition. A merger and acquisition best practice is to continually assess the integration plan and provide regular updates based on data on the current status of the M&A. It’s the only way to ensure in an objective way whether necessary progress is being made.
There’s a wide range of tools you can use to assess the progress of your integration plan. Some tools that can prove beneficial during the M&A process include:
- Virtual data rooms, like DealRoom and Digify, to store confidential information and work with banks and other key players
- Pipeline management software, such as Pipedrive and Zendesk, to keep track of multiple deals at once
- Project management software to improve workflow, organization, and productivity, like Monday, Asana, and Trello.
With these tools, you can improve the workflow of everyone involved in the merger or acquisition to ensure deadlines are met and the deal goes to plan.
Tip #7. Meet regularly
It’s also important to meet regularly and often to review and discuss progress and make tweaks or changes to the plan. Meetings with integration plan owners should occur weekly, and in some circumstances daily, and should focus on a review of measurable progress and a preview of next steps. The M&A process can be lengthy, and if your team isn’t on the same page, important information can fall through the cracks and delay the merger or acquisition. To improve communication, use tools like video conferencing software like Zoom, email, and communication tools like Slack.
Tip #8. Host regular check-ins with stakeholders
Similar to meeting regularly with the key players involved in the M&A, a merger and acquisition best practice is to also regularly communicate with stakeholders. M&As are relationship-intensive; communication with all stakeholders, external and internal, should occur in some form or fashion at least once a month.
Tip #9. Bridge corporate cultures
Bridging corporate cultures into a common core and allowing a bit of each to survive is important. The best way to find commonalities to be embraced and differences respected is achieved through dedicated, purposeful time together, both in and out of the office. There are several ways to bridge the cultures of the two companies being merged together or acquired, such as:
- Group orientations to introduce both parties
- Social events like happy hours
- Virtual meet and greets for remote employees
- Creating an inclusion council
- Change language from “our” to “we”
These are just some of the merger tactics that can help reduce culture shock.
Tip #10. Gather and use employee feedback
Use this as an additional information tool to assess integration progress and performance. You can never have too much information, and the thoughts and moods of employees are the pulse that every CEO and/or president should have his or her finger firmly on, particularly during times of great change and stress, such as an M&A integration.
Mergers and acquisitions can be a lengthy and demanding process. With this list of merger and acquisition strategies, you can help ensure the process goes smoothly. At CEO Coaching International, we offerexecutive coaching programswithhighly-trained and battle-tested executive coacheswith decades of experience at the executive and CEO level. Through ourexecutive coaching for entrepreneurs, you can gain more information on keys to successful mergers and acquisitions, along with other guidance on how to boost personal and professional growth.
About Michael Mass
Michael Maasis a successful manager and entrepreneur who, over a 20 year period, helped build and grow two different companies in the video game sector to USD300 million in annual revenue each year. Michael now coaches CEOs and entrepreneurs as a partner of CEO Coaching International.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average EBITDA CAGR of 53.5% during their time as a client, more than three times the U.S. average, and a revenue CAGR of 26.2%, nearly twice the U.S. average.