Changing tastes and macro trends have also changed the focus of these processes. The cross- border M&A boom, for instance, has brought issues surrounding cultural due diligence and integration to the fore, while the rise of M&A in the technology sector has fueled a more flexible approach to doing deals.
Mergermarket and Vintage gathered five experts to discuss how the dealmaking process has changed. As well as this, they offer up the lessons they have learned, through decades of dealmaking experience, regarding what makes for successful M&A targeting, negotiation, due diligence and integration.
Q: After finding the perfect target and getting the deal over the line, companies can sometimes forget that fitting them together is crucial to a successful transaction.
What are the key factors and priorities that make up a successful integration?
Brian Moriarty, former Vice President, Hewlett-Packard > There are several schools of thought on this and all have rationales. For me it’s key to integrate quickly because when you close, that is when a target will be at its most receptive to change. Missing this can be costly and destroy deal value.
Achieving the financial targets is almost always the biggest priority. On top of this, it’s important to retain needed staff in such a turbulent time.
Karim Motani, Corporate Development and Strategy Director, 1800flowers.com > We are a very seasonal business, and we tend to acquire other seasonal businesses. When integrating, our key priority is to ensure minimal disruption around our major seasons — Christmas, Valentine’s Day, Mother’s Day and so on. For instance, when we acquired our most recent business, the integration work slowed during our peak season, and it picked up again immediately afterwards.
Matthew Gemello, Partner, Baker & McKenzie > Speed and efficiency. We’ve got to go to market with the asset we just spent the money on, and whatever integration steps need to happen to allow us to do that efficiently and effectively, we have to do it. That recognition by clients is the single biggest change over the last 10 to 15 years. The integration is increasingly viewed as important as the acquisition itself.
The value from the acquisition can erode quickly if the acquired business is not properly integrated into the larger group. Yet, speed and efficiency have always been the priorities when it comes to integration; what’s changed is the amount of attention and focus our clients are giving it.
Marshall McKissack, Managing Director, Head of M&A, Stephens Inc. > The priorities can vary. Some buyers need access to synergies as soon as possible, some buyers want to make sure when the deal closes that the business runs as smoothly and efficiently as possible, with no interruptions for employees and customers and the organization functions as smoothly as it did the day before you close. It’s really about making sure those customers and employees are onboarded to your plan.
From what I’ve seen, the companies that have a plan for integration that is well documented, well supervised, well thought out and benchmarked — those are the ones that are doing the best. It’s about recognizing the synergies you’ve identified and valued before buying, and making sure it comes to fruition.
Buyers who have planned and prepared for those things and do it out of the gate are the most successful.
Jeff Drazan, Managing Partner, Bertram Capital > For us it’s all about the people. You can’t run a business without good people. Then, we focus on IT, which is our value driver.