M&A Best Practices (Part 1): Are You Prepared for Your Next Acquisition? Our Checklist for Success

This is part one of our series on M&A Best Practices. Tune in for the exciting conclusion: M&A Best Practices for after an acquisition.

Merger and acquisition (M&A) activities present exciting opportunities to grow companies, bolster brands, and capitalize on synergies between acquiring and acquired organizations. However, the process is complicated and there are important steps to take to protect this significant investment.

The stakes are high. One article by Harvard Business Review reports that more than 70 percent of all M&A activities fail. While preparation and planning makes a difference at any stage, following M&A best practices are especially helpful in easing the strain of the due diligence and announcement processes. 

In the following article, we recommend M&A best practices to apply before and during an M&A activity to ensure positive outcomes for all parties.

Calm before the Storm: Preparing for an Acquisition

Proper planning and forethought in the months and weeks prior to your company acquiring another organization will save you time during the announcement and integration periods and avoid role confusion. It will also assist your workforce in managing change. 

In the weeks prior to an acquisition:

• Come up with a project name. Once you select a company you plan to acquire, e-mail exchanges will increase dramatically and a significant number of meetings will appear on calendars. To ensure confidentiality surrounding the acquisition, select a project name and use it in all communications and scheduling requests. This small step will help a lot when it comes to organization.
•  Form a project team. Prior to the acquisition, select:

 > A project manager who will have the internal relationships and executive respect to enforce plans and deadlines, press leadership for decisions, etc.

 > A project lead from each department. This is a great opportunity to elevate high-potential employees. Tap the talent within your organization to work on a project that will have a huge impact.

> An assistant or deputy whose sole responsibility is to manage the overall project plan and support the team through upcoming deadlines/outstanding actions. Do not leave this role vacant. While it may seem that everyone can keep track of their own deadlines, that is a recipe for disaster. For the sake of accountability, it’s best to have someone else managing the timeline. 

• Establish project spaces (both virtual and physical). Establish a site within a secure shared space online (aka a virtual data room) where teams can house acquisition-related resources and easily communicate. Every department/lead should have a defined space to house documents and review, edit, comment. Additionally, if you have a cohort of team members in one place, consider the physical location(s) where meetings will take place. Is it possible to reserve a private war room for the team’s exclusive use?
• Develop and share project plans. Create a project plan template with a tab for each department/project lead. This could look similar in format to a Transformation Management Office (TMO) plan. This is helpful for keeping track of all of the moving pieces and identifying interdependencies.
• Inventory your non-monetary assets. As you consider the potential value of a merger or acquisition. Don’t forget about some of your less obvious assets. What BD, HR, IT, finance, legal, recruiting, training, and other systems do you own or lease? What subscriptions do you hold? What memberships are committed and paid? What marketing equipment do you own? During the very busy integration process, you’ll want to understand where there are potential synergies and potential conflicts. Ask the same of the acquired organization in order to realize savings and achieve synergies. Save time on your end by coming up with this list now.

In the Thick of Things: Conducting Due Diligence and Pre-Announcement Activities

Once you have a target acquisition, have your banking/equity partners in place, and read-in your project team, you can prepare in earnest for the announcement.

• This begins with due diligence, during which time you will have an opportunity to review the target firm’s operations including financial and sales pipeline information and ask questions of the acquired organization’s leadership. Time is precious and planning should run concurrent to the due diligence process.
• Once the project team is in place, determine the frequency with which the team will meet. Likely, this will be daily during the pre-announcement period, then weekly during the integration.
• The planning document is a living one and will change often in this phase. During team meetings, assess where tasks stand in relation to deadlines, what hot spots might flare, and what decisions are needed.
• Governance becomes a frequent topic during this period. What role will the leadership of the acquired company play following the transaction? How will their titles, physical location, and direct reporting relationships change? It’s important to think this through instead of making assumptions. If employees don’t see a clear hierarchy and know to whom they are expected to report, chaos will be the likely outcome.

• Additionally, consider naming conventions for the combined organization, as well as its business units or lines. Does the company name change? Does the acquired organization become a business unit, a subsidiary, or a portion of an existing business line? The answers to these questions will impact everything from the website(s) and corporate signage to stationary and e-mail signatures. Consider how you can engage employees and even customers in the re-branding process. For the best results, engage a professional as well!

One note of caution: Often, the creation, review, and approval of announcements, manager talking points, FAQs, press releases, and online content will reveal decisions that haven’t yet been finalized or information that has not yet been disseminated to the entire project team. Be conscientious about version control as you may need to do a significant amount of coordination within your team and with your external advisors (legal, banking, etc.) during this phase.

Teamwork Makes the Dream Work 

Most importantly, be patient during this process. Acquisitions can be highly emotional transactions for owners and employees. It’s necessary for the acquiring organization to be sensitive during this delicate dance, since 1) everyone wants to close the deal and 2) any rips in the culture or workforce could become red flags for your clients. This is especially true for professional services firms, in which the value of the sale lies in the company’s employees and their customer relationships. 

At Audacia Strategies, we help organizations prepare for and communicate during mergers and acquisitions. We never shy away from a challenge, in fact we thrive and hit our stride working with teams to communicate during times of transformation. If you need an M&A best practices communications strategy, let’s chat!

In our next blog article, we discuss M&A best practices in relation to running a smooth integration after an acquisition and we’ll summarize everything with a checklist you can put to use. Stay tuned!

Image by rawpixel from Pixabay