KingChapman Blog

Five Secrets of Successful Post-Acquisition Integrations

Posted by Larry Hoelscher on Jan 5, 2018 3:19:59 PM

Success in post-acquisition integration is essential to the success of any M&A. Even if the strategy behind the acquisition is brilliant, it must also have brilliant leadership in execution to achieve success. Based on our experience and research, we have identified five critical success factors for leaders in post-acquisition integration, in implementing organizational change and integrating new organizations.

These factors are:

  1. Communication, communication, communication
  2. Maintaining stabilities
  3. Integration of management processes and systems
  4. Organization design
  5. Winning hearts and minds
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Topics: Mergers & Acquisitions

Alignment: The Never-Ending Leadership Challenge in M&A Integration

Posted by Larry Hoelscher on Dec 12, 2017 3:33:44 PM

Recently, I was picking up my car after its routine maintenance, including tire alignment. We all know the consequences of poorly aligned tires on a car: tires wear out too fast, the car will have the tendency to pull to the right or left, making driving more tiring, etc.

As I got into my car, I had an interesting insight. Once my car got fully aligned, the moment the car touched back on the ground, tire alignment automatically starts to go out. When I left the dealership, I paid more attention to the bumps in the road, potholes, and other street issues that were going to impact the tires’ alignment.

This analogy is a good one for what leaders and their teams face in business, and particularly in any M&A integration process. Creating alignment with a new leadership team, post merger or acquisition, is an absolute must for the M&A initiative to generate the value expected. Just like my tires, however, generating alignment is not only a “first thing to do” phenomenon, it is an ongoing leadership challenge. It must be continually created, generated, tended to, and fostered because alignment is an element that is always on its way out. After all, all of us in business recognize that, like the streets we drive on, market conditions are never static, and are never promoting more alignment. As I said, alignment is always on its way out.

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Topics: Mergers & Acquisitions

The 'Right Person, Right Job' Process in Post-Acquisition Integration

Posted by Bob Chapman on Nov 28, 2017 10:33:02 AM

A critical element of success in post-acquisition integration is identifying the right jobs to drive performance and then selecting the right people for those jobs. Selecting people for key positions in the new organization is among the most critical steps in the integration process. These choices are key to determining if the acquisition is accretive in value. It also provides the foundation for future success of the business and adopting a powerful organizational culture. At KingChapman, we think about how leaders can succeed in dealing with the Conundrum of People in M&A. In over thirty years of consulting in acquisitions, we find that getting the right person in the right job is critical to future success. It provides an excellent opportunity for leadership in bringing two or more organizations together. Placing the right people in the right jobs is also crucial communication to people in all organizations regarding their leader’s commitments and values.

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Topics: Mergers & Acquisitions

5 Ways to Destroy Value in Acquisitions

Posted by Bob Chapman on Nov 20, 2017 3:10:01 PM

 
The number and size of corporate mergers and acquisitions continues to boom. The business press carries the stories of how these potential transactions could reshape markets and add value to the acquiring firm. Regardless of the enthusiasm and hype, the facts are that many of these acquisitions will not meet stated expectations, and in fact will destroy value. Further, some of these deals can be disastrous for the business. The risk is that massive shareholder destruction will occur as businesses falter; customers become disgusted and employees are dislocated. It is interesting to note that often when transactions are announced, shareholder price and value for the seller increases, while the opposite happens for the acquirers. Investors are aware of the risks of value destruction for the acquiring firm.

Creating value is not mysterious and doesn't require the proverbial “rocket scientist” to figure out. The actions needed to create value rather than destroying value are straightforward. Yet, for a variety of reasons management teams execute these actions poorly or ignore them all together. Why? First the obvious, virtually all of the reasons for the value destruction involve people. In the passion and pressure of getting a deal done, managers forget about their people. The arrogant assumption is that people will be excited about the transaction and will “fall in line”. Often those assumptions are wrong. We call this the Conundrum of People in M&A.

This conundrum of people is where many acquisitions go off the rails. This includes dynamics during the negotiations as well as execution post-acquisition. Let’s look further at the causes:

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Topics: Mergers & Acquisitions

Charters Are an Essential Tool in Post-Acquisition Integration Success

Posted by Bob Chapman on Jun 7, 2017 7:00:00 AM

Seventy percent (70%) of change efforts fail to deliver the expected results, according to Changing Change Management in the July 2015 issue of McKinsey Quarterly. The low success rate is attributed in part to the limited scope of most change management techniques, which focus on control and minimizing distractions. Change management is appropriate for small, contained changes such as updating the software in an accounting department. It is not appropriate for change efforts as complicated as post-acquisition integrations, in which case change leadership techniques are required. John Kotter describes the differences in change management and change leadership as:

Change management, which is the term most everyone uses, refers to a set of basic tools or structures intended to keep any change effort under control. The goal is often to minimize the distractions and impacts of the change. Change leadership, on the other hand, concerns the driving forces, visions and processes that fuel large-scale transformation.

Post-acquisition integration is a complicated form of strategic execution that requires breakthrough designs and unique organizational accountability during implementation. We think that organizing the integration as a series of well-orchestrated breakthrough projects is the optimal means of:

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Topics: Mergers & Acquisitions, Leading Breakthroughs

Executives Seduced by Types of Synergies in Mergers and Acquisitions

Posted by Bob Chapman on May 17, 2017 11:04:25 AM

Executives approach a possible transaction with the steely resolve to be disciplined in negotiations. Accountants, investment bankers and lawyers are hired to assist internal resources in this process. Then somewhere along the line, this self-imposed discipline breaks down and the prices and terms which are accepted are much less attractive than planned.

I had the pleasure of collaborating with the head of M&A practice for a premiere New York law firm. His firm specializes in mergers and acquisitions and is involved in many of the largest transactions. I asked my colleague to explain the phenomenon in which executive teams start off with a disciplined approach to price and terms, only to see that discipline erode towards the end of negotiations. My friend laughed, and then gave a colorful explanation. He said that what happens at the start of the process is that the executives give instructions to advisors that they must get the deal done on the executives’ terms. With that mandate, the lawyers begin hard negotiations with the other side. Then somewhere along the way, the instruction changes to “win the deal”. While it is seldom said “Win the deal at all costs”, that is essentially the message.

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Topics: Mergers & Acquisitions