FINANCE
There is a widely quoted statistic from the Harvard Business Review that 70-90% of acquisitions fail. There are many reasons for this but neglecting to plan for the integration of the target is key amongst them. Glenn Mills of EMC Corporate Finance gives some guidance on how to ensure a smooth transition
Integrating an acquisition: how to ensure success The question of how to integrate a newly acquired business can easily be lost while company leaders and advisers focus on the terms and getting the deal done. Large companies have teams dedicated to the acquisition process and are likely to have learned from their experience of previous transactions. But it’s a challenge for an SME seeking to acquire a business and to continue running it as a subsidiary or division. The best time to make a plan is during the due diligence (DD) phase. Questions for the target company will include what systems they use for finance, ERP and other functions; key stakeholders (e.g. personnel, customers and suppliers); and what compliance procedures they have in place. These are all essential for assessing the extent of the work required and feed into the transaction costs and timescales.
PEOPLE
The executive teams of both companies will have been involved from early in the process but once the deal is done and announced, the rest of the teams need to come to terms with it. It can be an unsettling time and everyone will be concerned about the implications for their roles. It’s essential that the leadership immediately address the organisations to explain the reasons for the transaction and plans for the future. A written statement with FAQs can help with the communication, but there is no substitute for personal interaction and allowing time to answer employees’ questions. Providing the opportunity for staff to visit each other’s sites can also be of benefit.
❛❛ The question of how
to integrate a newly acquired business can easily be lost ❜❜
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