A couple of years ago, before joining Third Coast Capital, I was in the thick of due diligence as Corporate Development Director on a major international acquisition project. At the same time, I was traveling globally to facilitate strategic planning and trying to juggle other acquisition opportunities. I had a bandwidth problem, so I hired Larry Radowski from Integrated Project Management Company (IPM) to augment my team. IPM got up speed quickly and delivered on their expertise.
Naturally, when approaching this topic I thought of IPM. I asked Larry what three things he thought were the most critical in any integration project. His answer: alignment of the acquisition objectives, tradeoffs between operational efficiency and long-term growth, and application of a consistent, proven management process. I’d like to explore each of these in more detail below.
Alignment of the acquisition objectives
This alignment is usually done well early on, but can diminish over the course of the integration. The effective integration manager uses the integration objectives to their benefit. In reality, once the integration kicks-off, teams begin to focus intensely on task completion and they often lose sight of the original objectives.
One simple technique to keep the proper focus is to calibrate and align the team often. We’d suggest that at every meeting, conduct a quick review of the objectives of the integration. The integration manager should provide a status as to achieving these objectives, i.e. arrow up, arrow down, where do we stand. Speaking about the health of the integration in these terms, casts a clear view of reality and allows team members to ensure their efforts are on track to deliver with respect to the related integration objective. It also allows the integration manager to detect for misalignment early and often, creating an opportunity to correct things before they really stray.
This technique is not a review of KPIs or tactics. It is a review of the high level strategic objectives for the integration. Using this tact, the integration manager can foster the breeding of a new organizational culture, changing the culture vs. simply reporting out, for example, where we stand with synergies at day 89.
The objective is to achieve organizational homogeneity – and to keep any changes aligned with the integration objectives. As an example, maintaining a focus to a typical high level objective such as cost savings by candidly asking the question – Why did we buy this thing again? If the team can answer this with three or four bullets you’ve got a good chance that you are aligned and focusing on the prize.
Tradeoffs between operational efficiency and long-term growth
The main synergies people get excited about are cost reductions, but there may not be enough thought about how the long-term business is impacted. An example is sales. A classic deal synergy is to combine sales forces, systems, and support staff. Often with good reason, as costs typically can be reduced. However synergies of this type can be prove difficult to obtain after a realization that the company must make significant compromises with customer relationships, sales force education (i.e. cross-selling), and system heuristics (the “spreadsheet”) that simply cannot be removed quickly.
Robust vetting of the synergies is needed to validate them before the team marches down a path of realizing them. Finding out in the middle of integration that the synergies were unrealistic to begin within is not good, for obvious reasons. Good questions to ask include: What are the pros and cons? What are the assumptions? What side effects may result from achieving the synergies?
You’re kidding yourself if there are no cons. The integration manager is going to have a strong opinion, but must make sure that the facts have been reasonably assembled upon stating the synergy (yet another case to get the integration manager involved early).
A consistent, proven process
Playbook is often an overused word. Basic project management tools can and should be applied. Dwelling on and getting lost in the details can be avoided by utilizing a consistent management approach. If you take an ad hoc approach to acquisitions, there’s never any organizational learning. Consider project management tools and techniques to manage the life cycle phases of the integration – initiating, planning, executing, controlling, and closing, typical project management approaches and tools can be found at www.pmi.org.