In our view, Integration is all the actions required to deliver the expected value of a deal and the associated returns to shareholders. It is typically a complex process where several barriers come into play simultaneously and in addition to running the core business. From suboptimal Due Diligence to unclear financial and operational targets, lack of communication, cultural divergences, organizational issues and process integration limitations, all these obstacles make Integration one of the most challenging processes Senior Management has to overcome. We help our clients eliminate all these barriers through a consistent and disciplined approach that combines a best-in-class Value Creation and Integration Planning phase with a well-thought out execution process to quickly deliver the plan and make synergies and value creation happen. We bring the discipline to focus on this key element and to provide accountability oversight.
Our integration approach includes the following activities:
- Value Creation (Integration) Plan Development: An interdisciplinary process where the sources of value that support the investment thesis are fully vetted, confirmed, prioritized and in many cases improved to “right-foot” start the integration process. We anchor the integration effort into the deal objectives and prioritize synergies in proportion to their value creation potential. We make sure the Value Creation Plan is fully linked to the Due Diligence effort, reflects robust sources of value creation and provide details on owners (who), actions (what), strategies (how) and timing (when) for each critical integration project or activity
- Synergy Confirmation, Structuring and Execution: A proven approach to assess, quantify, improve, implement and ultimately capture commercial (cross selling, product development, R&D), operational (procurement, manufacturing, supply chain) and managerial (G&A) synergies previously identified during diligence. Our synergy evaluation and structuring approach focuses not only on cost synergies but on the 3 components of value creation: Revenues, Costs and Capital
- Target Setting and Operationalization of the Value Creation Plan: We help our clients to convert synergy potential into specific Revenues, Costs and Capital performance targets for all key management levels including financial objectives for the top management team and specific KPI targets for commercial and operational stakeholders. We call this process operationalization of the Value Creation Plan as it decomposes the value creation targets of the transactions into very specific and measurable actions that need to be executed by the new commercial and operational organizations. It bridges the theoretical ideas to practical attainment and sustainment.
- Organization: We help clients appoint the right talent to the right places starting with the selection of a top-notch Integration Executive to lead the effort along with a leader for each functional area that needs to be integrated. We also help the organization to make the necessary changes to capture organizational synergies quickly and with a long-term value maximization mindset
- Culture is a Top Priority and Requires a Plan: In our experience a successful integration program requires a Culture integration plan that identifies potential cultural barriers and defines an agenda to eliminate those barriers and pave the way to develop a high-performance culture that combines the best of both the acquiring and the target companies
- Integration Office + Performance Management and Tracking: We bring rigor to the overall Integration process setting up an Integration office that leads the overall execution of the program, define the performance management process, optimally escalates critical issues to the right level and effectively mitigate risks
Key Enabling Processes Critical to a Successful M&A Integration
As an integral part of our practice, the following management processes need to be addressed, and, in many cases, prioritized as we execute the Integration Plan:
Urgency, Change Management & Communication: People and the existing company culture must be placed at the center of the PMI Plan. When company performance is expected to improve under a new management framework and culture decision making, management practices and personnel behaviors require change. But change by definition is difficult and contrary to human nature. The question is then, how to drive the organization to overcome this change inertia to perform at the best possible level, while navigating a difficult business environment?
Our PMI team helps our clients design and execute a deliberate, systematic and superior effort to win people’s hearts and minds and change mindsets, processes and behaviors. We use proven Best-in Class Change Management practices to mobilize the organization and achieve cultural change. Our approach includes 1) defining and communicating a compelling case for change across the organization and key stakeholders, 2) identifying and addressing all business and management factors generating suboptimal behaviors 3) appointing best leaders and talents in key roles across the program and 4) setting the Integration Management Office to drive actions, set the pace of the program and communicate issues and progress.
Performance & Financial Management: “What gets measured, gets managed” and management is required in high doses during a M&A Integration Process from beginning to end. Our team makes sure that people, processes and tools are put in place during the engagement to 1) track the right metrics at the right moment, 2) set ambitious targets proportional to the need for change, 3) ensure accountability for all key initiatives and 4) align business and individuals’ objectives through optimal definition of financial and non-financial incentives.
A solid financial management workstream is also required throughout the process to 1) quantify synergies and estimate timing of economic impact, 2) evaluate the economic and resulting return on capital of the new value creation strategy and 3) measure the level of value creation delivered to the bottom-line during execution.