I was recently invited to join a distinguished panel at an M&A networking event in London. With M&A activity still muted to due to a portfolio of headwinds - inflation, interest rates, global conflict, earnings etc. - and further compounded by a “holding pattern” of influential elections, an element of uncertainty prevails for now. However, it was estimated that there is currently $3.9 trillion in “dry powder” sitting with Private Equity waiting for a spark and we could also see some market consolidation as founders target some well positioned mergers to bulk up and potentially restore some capital value, closer to the halcyon levels of 2022. The forecast for 2025 among M&A practitioners is currently bullish.

 With this backdrop, I was asked to share some lessons from my experience of post-acquisition integrations. As an initial observation, considering how integral it is to the success of a merger, it seems bizarre that the integration phase is so often an afterthought within the M&A process, often giving way to an almost exclusive focus on just getting the deal over the line. I have witnessed the brutal impact that this can have. Once the champagne has worn off, reality bites, with the new owners demanding an aggressive return on their latest investment, leading to a collision of entities and tribes rather than an ordered merger. Vendors can then see their deferred consideration, potentially up to 50% of their deal value, disintegrating quicker than they can reach for their Shareholder Purchase Agreement, as their staff disengage and relationships turn toxic.

 So how best to prepare for a successful integration and avoid some common errors? The key is to minimise disruption and maximise momentum. With that in mind, I feel that there are 3 themes to embrace. In future posts, I’ll expand with more detail on each, but for now, the headlines are as follows:

 1.     Your strategy must be clear and compelling.

 A clear strategy gives staff a sense of confidence, purpose and direction. It will provide “The why” regarding this transaction. A compelling strategy buys you commitment to the complex and challenging integration journey ahead. For vendors this element is critical. Their employees did not sign up for this event and their future commitment to this new chapter is far from guaranteed. So give them a new, compelling alternative future. Seeing valuable revenue and scale generators walking out the door serves neither the Buyer, nor the Vendor. If the value of this acquisition within the strategy is clear and your senior stakeholders can see how it furthers “the cause”, then as a leader, you will unlock discretionary effort and goodwill. You will need both.

 2.     Your Integration Plan should be detailed, inclusive and timebound.

 To get the quickest return, the process of integration needs to start promptly post deal completion. That requires much of the complexity and detail across the multiple functional workstreams to be captured in the weeks running up to “deal day”. As a vendor you should demand sight of this plan pre completion. There is too much at stake to allow any ambivalence, or complacency, so ideally have some of your senior leaders involved in both the planning and execution phases. As the Purchaser, a clear and detailed plan with defined task ownership buys you credibility and respect, as well as offering the best chance of success. Milestones, or “guiding principles” should be aligned to the broader strategy to accelerate the targeted return to shareholders, whether, for example, through cost synergies, or enhanced performance, or both!

 3.     Prioritise People over Process

 While the process of integration can be planned meticulously, there is no template to guide people through an integration. However, when integrations do fail, it is typically because of people rather than process. Post acquisition, the atmosphere is dense with uncertainty and change. Third parties – competitors and recruiters – will opportunistically target your business to try and entice away talent that has yet to commit to this new, post-merger landscape. Structured and frequent communication must be front and centre of your integration plan. Don’t allow any vacuum in messaging which can be easily filled with an alternative, negative narrative. Align your communication to the purpose, or strategy and update on progress regularly. Engage key stakeholders early in this exercise and cascade some of your messaging through them, so that they become recognised evangelists.

 In summary, while the planning and execution of an integration require strong management, securing the hearts and minds of your most crucial assets requires proactive and authentic leadership. Integrations are a team sport. The cohesion and congruence of effort and attitude will be influenced by all three of the themes above, but your own people will typically determine whether this is a successful investment and, consequently, a springboard for future growth.