Failure to plan and execute integration properly can undo months or even years of hard work. More than 30% of companies fail to achieve their revenue goals after a deal closes.
This is unfortunate, but also not too surprising. For some reason, perhaps because it comes at the end of the M&A process, leaders tend to forget all about integration until the deal closes and then rush to hastily implement a plan. Even the most well-thought-out integration plans face some hiccups because there are so many moving parts to consider including employees, customers, operations, and branding. Orchestrating the best solution takes time.
One of the important issues to consider when planning for integration is talent. 82% of companies that are successful “make it a priority to implement a plan to retain to commercial talent,” according to a McKinsey survey.
This is an area that is easily overlooked by buyers. We think that because we are the buyer we are superior to the seller in all aspects. The reality is a company is made up of people and often those are its most valuable assets. As a buyer, you have to ask, “What will happen to the acquisition if key players leave once the deal closes? And who are these key players?”
Keeping talent on-board begins long before the deal closes. During due diligence, instead of only focusing on red flags, also focus on identifying “stars,” or key employees across all functions of the company. It may be the top salesperson, a senior executive with industry knowledge, or an engineer responsible for developing the company’s products. Next, you must consider how you will get them to stay at your company. It might be through an enticing package and perks like a new title and increased responsibility, a higher salary, a car allowance, or a flexible work schedule. Whatever the case may be, retaining these “stars” is essential to the acquisition’s success.
This is another reason why hard-nosed negotiation tactics are not very effective in strategic acquisitions. If you need the owner to stay on after the deal closes, beating them down as much as you can on price may not work in your favor in the long-term.
Do not make the mistake of overlooking people when it comes to integrating your acquisition. Make sure you identify stars early and maintain a healthy relationship throughout the M&A process so that once the deal closes you will have the right people on your team.
Learn more about integration. Join our webinar Keys to Integration Success.
Date: Tuesday, August 22, 2017
Time: 1:00 PM ET – 2:30 PM ET