The ink is drying, you’ve shaken hands and the champagne is flowing. But the effervescent atmosphere of securing a deal quickly dwindles as you come face-to-face with the hard graft required in the coming months to ensure it’s a success. So how do you drill down to the next level of detail from the high level synergies examined through the deal process?
Once the champagne cork has popped, creating true value is all about strong planning and communications.
“Achievement is always preceded by spectacular preparation.”
– Robert Schuller
Plot your course
Ambitions and expectations are often sky high following a successful transaction. But, to translate high-level synergies into a detailed and specific agenda requires a clear and achievable plan to be put in place for the business. This way, delivery teams at all levels of the organisation can execute the actions to deliver tangible results – helping to exceed the return benchmark (e.g. IRR) and exit valuation. Having a detailed 100-day integration plan is fundamental to any successful transaction.
A 100-day plan gives you:
- an achievable horizon
- the ability to sustain momentum
- the direction and pace for everything that needs to be delivered.
Yet many organisations don’t give this the attention and rigour it deserves. This plan should be the foundation from which key profit drivers in the organisation are tracked and prioritised. It should also be the cornerstone from which cost saving measures can be developed, refined and realised. Through operational consolidation, the 100-day window means that early issues will be captured. It also enables early remediation actions to be taken. By identifying key integration and operational milestones within this window, issues are less likely to unexpectedly fall on the already ‘stressed’ business. This will quickly translate into tangible results and a healthier balance sheet.
In the past, these plans were commonly focused only at the CEO and board level with details seldom communicated to other appropriate levels. But this is no longer enough, as a broad and coordinated governance approach is required across the organisation. Unless planned leadership is established at all levels, changes may not pan out as expected, timings may slip, and exit may be delayed. Accountability throughout the organisation ensures smaller tasks, often a fundamental part of the critical pathway, are completed in a timely and efficient manner. Operational and divisional heads should have a clear understanding of what they need to get done, with incentives in place to drive success – all of which are guided by the 100-day plan.
Stop your team from walking the plank
There is a large focus on the pre-deal communications process, with legal and resource considerations being key. However, communication is also a huge critical success factor throughout a transaction.
At the bid stage this may have focused on aligning expectations and desired outcomes. But, once a deal has been signed, employees, suppliers and stakeholders are still unsure and unsettled, so maintaining a dialogue and keeping communication transparent is the way to success. PE firms have a reputation for reducing headcount, which can create challenges. So early transparency in these decisions will prevent unnecessary anxiety, and sustain an open and collaborative culture. Management also need to communicate top down continued support for the transformation process, motivating staff and ensuring a positive ethos is maintained around the deal.
The importance of a positive outlook is often overlooked. As a company’s culture morphs it’s this attitude that should endure and it’s the one that will drive successful outcomes.
As a business is transformed, its customers, suppliers and competitors will all react in different ways. Effective integration plans are ones that are fluid and can adapt to uncertainty as the environment evolves around them.
X marks the spot
We’re in an economy where 83% of mergers or acquisitions fail to derive value (according to a recent KPMG study)… It’s glaringly obvious that more needs to be done.
Organisations need to have the right teams and genuinely implement a fluid and detailed 100-day integration plan.
Preparation and communication really will unlock the treasure.