There is plenty of evidence that that the returns achieved from mergers and acquisitions are very varied. How can a company increase the odds of success? Research shows that the most successful companies link effective strategic formulation, pre-merger planning and post-merger integration. Having all three components is critical for success:
What should the goals be of Post-Merger Integration?
- A vision, strategically formulated, for where the company is going and how the deal fits. Companies then identify the appropriate targets.
- A pre-merger process that targets companies with the right capabilities, gets the deal done and begins the integration through rigorous planning and building of trust among the players.
- A post-merger process that seeks to capture well-defined sources of value and is led in a way that captures as much value as possible as quickly as possible.
The primary goal of the Post-Merger Integration exercise should be to capture as much value as quickly as possible.
Value capture can be derived from several key sources, and depending upon the circumstances of the merger, some will be more valuable than others. As an example, the following areas are generally useful to consider when identifying sources of value:
- New products, service offerings, markets, customer segments, distribution channels
- Enhanced market presence, market capture
- Enhanced product development efficiency (leveraged R&D, internal best practices)
- Combined technologies or capabilities
- Leveraged sales force
- Increased capture of the value chain
- Integrated supply chain
- Leverage procurement volume (product and non-product)
- Production footprint optimization
- Facility optimization
- Vertical integration, de-integration
- Distribution channel optimization
- Sales force optimization
- Headquarters consolidation
- Support function consolidation (human resources, finance, I.T.)
In addition to considering the full range of value options, successful companies also use the pre-merger process to speed value capture. This allows them to improve cash flow, stem investors' and other stakeholders' fears and move on with the other elements of the plan to achieve their vision.
- Financial value (balance sheet items, taxes, etc.)
- Optimized programs and policies (e.g., benefits programs)
- Rationalization and/or elimination of special programs, projects, etc.
- Additional alliances or relationships.
Why use an Interim Manager to lead Post-Merger Integration?
There are many reasons why an Interim Manager is often the best approach:-
an interim is a dedicated resource that will have the bandwidth and drive to ensure integration issues are addressed quickly and effectively, freeing management to ensure no loss of value in the current business
an interim is not associated as being from either the acquirer or the acquired and brings no baggage in terms of pre-judged solutions or relative strengths and weaknesses
an interim is able to act independently in the best interests of the newly merged company ensuring all avenues for value capture are properly investigated
an interim exists outside the organisational hierarchy allowing him/her to work on best-fit organisational structures for the newly merged entity
as opposed to most consultants, interims are flexible line managers and not driven by simplistic methodologies
an interim will have prior experience of various successful integration exercises and know that one size does not fit all
To hear more about how an interim manager could help you realise the value of your acquisition and to receive specimen CVs of Alivero's PMI Interim Managers please call on +44 (0) 1235 766236 or email to email@example.com