Due Diligence and Integration

How to use due diligence and integration effectively to maximize your opportunity for success.

Yahoo says the private information of at least 500 million has been compromised due to a cyber-attack in 2014. In the biggest security breach to date, hackers gained access to sensitive information including names, emails addresses, telephone numbers, birth dates, passwords, and security questions. The security breach has ramifications not just for Yahoo and its […]

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During due diligence most companies will present you with their formal documents including HR manuals, procedures, financials and organizational charts. It’s not enough to rely on these documents alone; if you want to know what a company is really like, you’ll have to dig a bit deeper. One way to go beyond the surface is […]

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One of the primary reasons acquisitions fail is because of integration challenges post-closing. Implementing your integration plan smoothly and effectively is key to realizing the synergies of your acquisition. In a KPMG survey, U.S. executives cited a well-executed integration plan as the top factor that leads to deal success. Integration is a massive undertaking that you […]

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You’ve developed your strategy, identified the right markets, negotiated with the owner and papered the deal. If you think once you sign on the dotted line your job is done, you are mistaken. The M&A process doesn’t end when the deal closes. M&A is really a journey “from beginning to beginning” where the consummation of […]

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During formal due diligence, which typically begins after signing the letter of intent, you gain access to in-depth information and begin taking a closer look at the acquisition target. Traditionally the primary purpose of this stage of the M&A is to identify significant risks that could impact the terms of the deal or put it […]

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Culture is an important part of an organization, but it can be difficult to define. Unlike other areas, such as finance and operations, which have concrete metrics like revenue, EBITDA, and number of employees, quantitatively measuring culture can be challenging. Leaders often rely on their “gut” to understand another company’s culture, but this leaves an […]

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Due diligence is an important step in the acquisition process that comes prior to closing a deal. Most people think about due diligence from a risk assessment standpoint or as a checklist of items that must be completed in order to move the deal forward. Traditional reasons for undertaking due diligence include evaluating strengths and […]

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Poor communication can really hamper your integration efforts, especially when you have to break bad news to your employees. When it comes to sharing an unpopular message, some executives try to sugar coat or beat around the bush. In my experience, avoidance tactics are not effective and just make employees angrier once they eventually find […]

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With every acquisition you have a choice of how you will integrate the two entities. Often buyers assume a “winner-takes-all” approach where they impose their systems and culture on the acquired company. This is not always the best way to successful integration. In fact, it may be best to integrate some of the seller’s practices into your own […]

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Whenever I am consulting on an integration program, I introduce a critical component I call the 100-Day Plan. I’ve found that when companies get the 100-Day Plan right, the likelihood for a successful integration is extremely high. But if you don’t implement the 100-Day Plan at the beginning, integration generally doesn’t go well. Why is […]

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Q: How often are you able to bring together both buyer and seller functional personnel during due diligence? Some sellers might be sensitive to confidentiality and not open to bringing their personnel into the fold. A: When conducting due diligence, we advocate a functional approach, where leaders from the buyer’s organization meet with the seller’s. There […]

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Cultural due diligence is a critical task in the acquisition process. It exposes hidden problems and risks, but also may identify opportunities. However, if you do uncover red flags, you may need to reevaluate the deal. Sometimes you must simply call it off.  We have walked away from a transaction when due diligence revealed a […]

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Effective leadership plays a critical role in integrating companies following an acquisition. Challenges abound, for instance when disagreements arise between the executive team and the rest of the staff. How do you bridge the gap? Communicate painful decisions? Maintain calm during a period of change? As the leader of an integration process, you should: Be […]

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Culture can often be neglected simply because it is difficult to measure, especially when compared to hard facts such as number of employees or company revenue. After all, what constitutes a “good” culture? Definitions may vary from company to company and even among members of your own acquisition team. Despite this challenge, company culture should […]

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Culture clashes can make or break a deal. Just think about a few infamous deals that fell apart, such as the Time Warner-AOL merger in 2001. In Deals from Hell, Robert Bruner analyzes the reasons for failure in depth along, including examples of deals that failed due to cultural issues. In fact, cultural issues are […]

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It seems as though the employee vs. contractor issue is popping up all over the news. Virtual assistant startup company Zirtual just fired over 400 employees by email because the company couldn’t sustain its payroll once it converted contractors to employees. The Wall Street Journal has also highlighted the many startups that are now grappling […]

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Q: “What if the buyer and seller functional leaders do not match? How do you coordinate the two sides?” We take a functional approach to due diligence where we encourage your leaders from sales, marketing, finance, operations and other functional areas to meet with their respective leaders on the seller’s side. A functional approach ensures […]

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People are critical to the success of your company, and it’s no different in the business you are acquiring. But how can you go beyond the surface and find out what employees really think? It is doubtful employees will be completely open and honest when asked point blank, “Do you like your job?” One of […]

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There are many different ways to handle brand integration – whether it means discarding the target’s brand in favor of your own, keeping both brands, or creating a new one. Each strategy is valid, depending on your brand equity and strategic rationale for acquisition. Let’s look at a live example: In its $2.5 billion stock-for-stock […]

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Once you’ve closed the deal on a new acquisition, what do you do about the brand? Keep it as it is? Replace it with your brand? Create a hybrid? Something else…? The brand is one of the assets you acquire when you buy a company. It may be worth a lot. Or little. Or nothing. […]

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