How to Create a Post-Acquisition Game Plan

Your company made an acquisition. Now what?

Now comes the easy part – NOT!!  Successful post-acquisition integration is more of an art than a science, but a solid implementation plan is critical.

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Large companies typically have experienced integration teams that are trained to handle post-acquisition planning and still a significant number of acquisitions fail to perform as expected. Even with the right planning, running your company post-acquisition is a challenge.

How disruptive will the acquisition be to your day-to-day operations? The interruption often depends on the type of acquisition. If the acquisition is stand-alone, there may be little impact on the day-to-day function of your existing operations, whereas integration of a product line or acquisitions for economies of scale may be quite disruptive.

No matter what, as the CEO, you have a significant role to play.

Understanding the Impact Post-Acquisition

Any acquisition is culturally, economically, politically, and to some extent, personally disruptive to every team member of both companies. No matter how solid your team culture, expect some waves. An acquisition also creates uncertainty that often drives employees to exhibit self-preservation behavior.

 

To counteract fear of change, it’s incumbent on leadership to communicate with the team. Clearly define the why and what of the acquisition plan. Work to create a shared vision and an environment of trust in the negotiation process. These actions will set up the basics for transparency and form a base of communication. Post-acquisition, this need for transparency still stands. Remember, once the acquisition is complete – communicate, communicate, communicate!

 

Timeliness of the communication during and post-acquisition is also critical. Immediately after the close, share the company vision with the entire team; explain the expected benefits for all members of the combined organization. Ensure consistent messaging throughout the entire organization.

Don’t make the mistake of assuming people will believe you. I was told that I would survive a merger at one point and, as you might imagine, I took a “we’ll see” attitude and covered my bases anyway. It’s instinctive for employees to protect their own interests.

Communication needs to be consistent, frequent, and ongoing. Err on the side of under-promising and over-delivering. To the extent possible, make any drastic changes within the first 30 days. Whether those changes include replacing management, eliminating duplicate positions, or selling off a product line, get the change over with! If there is unexpected bad news, be transparent in explaining the potential impact and your planned response.

If the acquisition is a stand-alone, you bought it (at least partially) for the management team; stay out of micromanaging operations and team communication. This does not mean abdicate. You should focus your role of bringing together the resources to gain the expected benefits such as purchasing power improvements or consolidated finance and accounting functions.

If the acquisition is fully integrated, the planning and process pre and post-acquisition are much more complex, broadly affecting the entire organization. Provide resources and tools to enable your team to implement the integration plan, optimize performance, and measure the benefits.

The Role of CEO Post-Acquisition

Chances are the acquisition was your brilliant idea, so now what?  In your role as CEO, you will guide the overall success of the acquisition. According to McKinsey, handle the integration well and you can expect 6 to 12% higher returns than those who don’t. Sounds hard, right? That’s why careful strategic planning is critical to your success.

Create DAY 1

As you negotiated the contract, certain performance will be required DAY 1. Creating DAY 1 means making sure that everyone hears the same message. DAY 1 is THE opportunity for a first impression.

• Celebrate!!!! Whether individual events at multiple locations, a company-sponsored lunch, a small gift or remembrance, or a giant teleconference, let everyone know DAY 1 is an important and exciting day. Acknowledge uncertainty, share pertinent details, and set expectations. Explain the why and the what. Outline how the acquisition answers those questions.
• Identify and introduce the integration team. Set the 3 top goals on the agenda for the transition.
• Communicate directly with customers, vendors, and other stakeholders (using the stakeholder blog), prior to public announcements.
• Issue the press release and let the world know of your new adventure. Use your social media platforms and website to share the message.
• Perform formal onboarding for new team members.
• If possible, meet individually with new team members and provide them with an overview of the vision, mission, and their role in the combined company. Remember people often fear change. Explore their concerns and be prepared to address them as soon as possible. Be prepared for skepticism.

Pick Your Top 3 Post-Acquisition Goals

With your new management team, select the top 3 priorities for the post-acquisition integration. These should reflect the why that the acquisition answered. Once selected, engage SMEs (subject matter experts) in the areas of integration to build the timeline. This may mean directing Purchasing to renegotiate purchase contracts with your vendors, consolidating buying power, or conversion to a new ERP system.

Getting everyone to share the same vision and move in the same direction should occur within a 90-day window. The longer the timeframe it takes to implement, the more resistance the company may face internally. Don’t miss the opportunity to revamp and optimize systems. Limited resources mean selecting the best strategy to get the most done in the shortest time.

Pick the Right Team

In my small company, my controller and I were the acquisition team. If possible, select people from both organizations as team leaders and make sure they understand the vision. Getting unbiased input is important, but you don’t need skeptics in leadership roles who are undermining the process.

Encourage the adoption of best practices from both organizations as the post-acquisition project plan is developed. As with any project plan, there should be SMEs involved from any area or subject affected by the acquisition. A detailed implementation plan is critical to successful integration. While a significant amount of the post-acquisition implementation can be boilerplate, it needs to reflect the negotiated items from the contract.

Lead!

Your team looks to you, the CEO, as the rudder of the ship. The team wants to know the captain has the situation under control. Set expectations, measure results, keep the end in mind as the company navigates through the integration. Celebrate milestones and share progress reports (good and bad). Communicate.

Engage heavily with the new management team members to develop their trust. Engage new team members with existing team members both formally and informally to foster relationships and collaboration. Encourage broad communication of the messages up and down the organization. Participate.

Throughout the post-acquisition integration, encourage discourse on best practices, issues, changing roles, expectations, and concerns. Listen.

An acquisition could be a smart move for your company, provided it’s approached with deliberate planning and an understanding of the struggles that will arise. As the CEO, once you’ve started considering an acquisition, your work as a leader has just begun. Clear, consistent communication and planning are key. With the right approach, your company can emerge stronger and even better post-acquisition.

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