Acquisition is only half the story

Finding the right business to acquire or merge with is only half the story, the real difficulty comes in ensuring a quick and successful integration of the businesses. This assertion is based on experience from the post merger integration work with two of the UK's most acquisitive law firms.

Integrate successfully

Ultimate responsibility for the integration must rest at the top. It will require someone with the authority of the executive board to make decisions and manage the departments and people that need cajoling, or pushing. This gives the project gravitas and demonstrates the importance of this initiative compared to other business priorities.There are important reasons why governance of the integration project must sit at the highest level, as part of the operational or executive board, with department heads leading the project streams:

• Significant decisions will be made by department heads and these must be shared at executive level
• Many cross-departmental issues will need resolving and the CEO can chair these meetings
• The integration project will generate hundreds of reasons to communicate to employee groups and these messages need to be prioritised and agreed at board level
• Ultimately these streams transition into day-to-day management and this board will be home to any outstanding actions.

Whilst the board can start designing and delivering the project, energetic team leaders will be keen to get on with building their enlarged departments, but this energy must be applied with a ‘light-touch’ to ensure a consistent pace of change with other departments.

Building the Plan

Building a plan that fully describes all the required activities to complete integration and deliver the stated benefits produces the Gantt chart. It not only lays out all the activities, top left to bottom right, but shares understanding of all the required actions and engenders buy-in from those responsible for delivering a successful project.
The phases of an integration project should always be the same, across all departments: people; propositions; process and systems. This ensures the most critical and often most difficult element, the people, is addressed first. Adopting a consistent approach to departmental plans will ensure firm wide initiatives are distilled from the plans, namely:
• Building an organisational structure that really works for all departments
• Communications to stakeholders and most importantly employees
• Implement new business processes, which can be a point of tension, like adopting a single billing system
• Integrate IT systems – often a major project in its own right

The finished departmental plans need to be validated to ensure they contain all the actions required for a successful integration and to deliver the expected synergy savings. This validation should be undertaken by someone with relevant experience of a major integration project.

Managing the integration

It will take weeks for all the departments to build their plans. Significantly longer and alarm bells should already be ringing for the project sponsor. A review cycle for the project must be established at the outset. This frequent, often weekly, review of the plans will help flush out; blockages preventing progress; inter-departmental issues and threats to synergy savings.
Apart from the review ensuring the management has a live summary of the project, it forces progress thanks to the competitive nature of departments and their heads to deliver targets or be seen failing to do so. Competitiveness is important. The pace at which departments complete their activities must be the same. The Integration runs at the pace of the slowest department.

Telling everyone

Once the plans are finalised and the acquisition or merger is at the point of announcement, the following must be addressed with a consistent, structured approach:
• Staff – senior managers visit all staff locations, make the presentation and leave everyone with something that explains what is happening in more detail, for them to read when they are over the initial shock.
• Customers and suppliers – key clients and suppliers should be told in person or over the phone, with an email to all others.
• Everyone else – web sites for all impacted businesses should have updates, prepared in advance, ready to go once initial contacts have been made. 
Integration is exciting but unsettling

Although exciting for the business leaders, integration is unsettling for the rest of the business and any likely impact, good or bad, must be communicated quickly.Whilst developing the organisational structure, the senior board must listen carefully to employees and understand their issues as they will be feeling a loss of control. This is the time for decisive action and clear communication to put minds at rest about the future.
Some staff will choose to leave, but the majority will stay if they are shown what benefits the future of the integrated business offers them. Forget big picture stuff and address the very personal issues that will arise.

Looking outside

External integration project managers (IPM) have the advantage of no aspirations of longevity within the firm. It enables tough performance based decisions to be made that challenge long-held views and opinions.
An external IPM is more cost-effective; able to solve problems and then exit the business after integration. Any permanent individual in the role will seek work post-merger, or may lengthen the process to consolidate their position.
Purchasing external resources concentrates the collective mind; costs are kept under greater scrutiny and are generally treated more wisely than when only internal resources are being utilised. The ultimate tangible target for most business integration projects is the delivery of synergy savings. For an external IPM it is easier to challenge the proposed savings, making the process more like an audit.

The approach becomes one of “don’t just tell me about the savings, show me”. It is the role of the IPM to keep the management team honest – not a question of integrity, just ensuring the team stick to timescales, prove progress and deliver savings.

Stuart Crowther is Managing Director of Specific People, a consulting services company dedicated to helping businesses work through all aspects of integration and organisational change. He also coaches those within an organisation responsible for project management and delivery.