The M&A process provides dealmakers with several opportunities to enhance acquisition value — as well as pitfalls to destroy it. What defines good targeting, negotiating, due diligence and integrating?
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: What would you say are three key lessons of successful post-merger integration?
Brian Moriarty, former Vice President, Hewlett-Packard > Decision making must be quick. You need the firm to make decisions quickly as stalling can sometimes kill deals. It is often better to be quick — and sometimes, wrong — than to wait for incremental information. Secondly, as I mentioned, it is key to integrate quickly. People are ready for a change right at closing, and it is hard to get that mindset again if you only start to integrate six to nine months later. Capitalize on the energy.
Finally, it is key to consider cultural differences — something buyers sometimes overlook. You must assess the target’s culture and how it relates to your company and how it will affect it. Helping people to identify the differences and change them is essential, and often overlooked.
Karim Motani, Corporate Development and Strategy Director, 1800flowers.com > As Brian hinted at, a lot of it centers on speed. For one, you should start integration planning before closing the deal. This will help you get a clearer picture of what the integration will look like, and prepare people in advance. Secondly, the process should start on day one.
And finally, ensure any personnel changes are done as soon as possible. This helps to minimize disruption, and ensures that you can focus on delivering what was promised with the deal.
Matthew Gemello, Partner, Baker & McKenzie > The institutional buy-in point is key, and the single greatest thing that we can do to convince our clients to go down this path is to get a core team. An optimized core integration team will include representatives from the core functions: legal, tax, HR, IT, treasury and commercial. If that control group has enough gravitas to move the needle within the organization, you can get through everything you need to get through efficiently. You build a good project management office essentially, allowing you to navigate your way through roadblocks.
For me, it’s all about how you’re going to organize the project that is going to dictate the success or not. You can make a lot of smart decisions about what you’re going to do from that perspective or the group’s perspective, but if you have a key function missing, you’re really in trouble.
Integrations are massively cross-functional exercises; it’s almost the epitome of one. What you can’t do is get into a turf war where you have silos that aren’t communicating to each other and people are dug in — that’s mine and not yours, I’m supposed to do that not you, for instance — it has to be collaborative and there has to be buy in from the top.
Jeff Drazan, Managing Partner, Bertram Capital > Communicate broadly, frequently and honestly. Make sure that you have a plan, and on top of this, you have to identify and empower leaders from both groups.