P
Padmini Das
Guest
In this insightful conversation with Karen Williams, VP of Corporate Development at Progress, we delve into the best practices for integrating a business after an acquisition. Karen shares her expertise on the importance of having a dedicated role for M&A integration, the key factors to consider during the initial stages and the essential roles and governance structures necessary for successful integration.
As the VP of Corporate Development, my role involves overseeing the integration of acquisitions within our organization. This includes strategic planning and execution phases to ensure smooth transitions during the merger process. A successful M&A integration requires focused attention and dedication to achieve overall success, achievement of an organization’s strategic objectives and delivering the return on investment of the acquisition.
In my experience, the key factors that determine whether an organization should have a dedicated role for M&A integration include the organization's strategy, frequency of acquisitions and expectations of the integration process. If M&A is a core part of an organization's strategy, having someone responsible for the integration of acquisitions is crucial. Integrating acquisitions is a complex undertaking and requires focused attention.
Corporate development practitioners aren't the only ones who can lead the integration process or develop the integration playbook. My role, for instance, doesn't always sit within corporate development; it can be positioned in different parts of the business, depending on the organization's structure. Many companies do a single deal without having someone dedicated to this role, which is why I was a consultant before joining Progress. Often, clients would bring me in for their first acquisition because they didn't have that role internally. Typically, I would train and mentor someone throughout the process and help them develop their playbook for future acquisitions.
Organizations benefit from having someone focused on integration full-time if M&A is a key part of their growth strategy, like it is in Progress. While the broader team can have other roles, having a dedicated individual ensures that integration doesn't become an afterthought or secondary priority. Without this focus, the success of the acquisition and the financial investment are at risk.
The entire M&A process is challenging, from sourcing a deal, to diligence and getting it over the finish line. But closing the deal is just the beginning. Integrating it well with the right priority and focus is what will determine if an acquisition is successful.
First, you need an executive champion who focuses on the strategic rationale of the acquisition while keeping the core business running. The integration leader partners with the executive champion to manage day-to-day integration activities. Depending on how an organization is structured, the integration leader may or may not report directly to the executive champion.
A steering committee, composed of senior leaders across key front office and back office business functions, provides oversight, guidance and serves as an escalation point, if needed. A cross-functional team of workstream leaders manage the specific areas of integration for their respective functions.
It's crucial to have a framework that enables the identification, alignment and management of interdependencies. For example, one of Progress’ best practices for M&A requires that each workstream has its own playbook that is customized into a detailed plan for each deal based on an acquisition’s unique deal profile and strategy. Together, all the plans feed into a master integration plan which is used to oversee and manage the overall integration. The result is alignment on interdependencies, effective risk management and increased efficiencies.
Identifying key employees and influencers within the acquired organization is also vital. Ideally, these individuals, whether at leadership levels or as respected contributors, would become part of the integration team and align with their functional counterparts to support the integration process and serve as change agents.
Successful M&A integration requires careful planning and consideration of several key factors. Developing a comprehensive playbook is one of the most effective strategies. This playbook serves as a guide through each phase of the deal process—from diligence to close, and through integration process to business as usual. The playbook ensures alignment across the organization and ensures a smooth transition throughout each phase of the deal lifecycle.
The playbook serves as a foundation and is customized based on the unique aspects of a deal and the insights gained during diligence, outlining the necessary steps and timeframes to meet strategic and organizational goals. This facilitates the development of a preliminary integration plan into the deal business case, learnings, risks and priorities identified during the diligence process.
Another key factor for success is bringing the integration leader into the process early. Ideally, the integration leader would be a part of the deal process right from the beginning of diligence. This enables them to put an operational lens on the business, formulate a plan for integration, support and guide the deal team on priorities, opportunities and risks and ensure a smooth transition from diligence to integration.
The initial phase of the integration process, from day one, through the first week and the next 90 days, is crucial. During this time, the focus should be on balancing integration, business continuity and value creation over the first 30, 60 and 90 days. Preliminary plans developed during diligence need to be validated, refined and executed. It's essential to integrate in accordance with the acquisition strategy without disrupting existing business operations. Business continuity is vital for both the acquired company and the core business, aiming to add value while maintaining operations. The playbook educates users on the why, what and how of the process, ensuring clarity on priorities and phases.
In addition, a comprehensive communication plan that ensures effective communication with all stakeholders, internal and external, is essential. Many acquirers come out of the gate strong with communication, but then it tapers off quickly. It is important to maintain a communication channel which is consistent, continuous and very transparent throughout the integration process to ensure a smooth transition for customers, partners and employees.
These key factors, along with the governance structure previously discussed, are critical to the successful integration of an acquisition.
Handling different regulations and cultures during company integration involves several key steps. The geographical location of your workforce significantly influences the profile of your deal. Different countries have varying statutory and compliance regulations as well as cultural differences that must be considered.
When acquiring a company without a sales ecosystem, leveraging your global presence can significantly grow the business. This involves optimizing value creation and operational efficiencies, especially when the acquired company is small.
Ensuring team alignment is also crucial. Everyone involved in the deal process should understand the strategic rationale behind the acquisition. This helps frame the right questions for diligence which, in turn, highlights key areas to focus on during the subsequent integration process.
Tight coordination and a smooth handover between the diligence and integration teams is vital. Ideally, there would be continuity across the teams so that the key decisions made during the diligence process are carried through the integration process effectively. Continuity in the team helps to ensure that there is no miscommunication and ample accountability for execution.
Defining success in an M&A integration involves several critical steps. Firstly, it's important to establish clear goals and objectives for the acquisition, which should align with the strategic rationale behind the deal. This includes setting up guiding principles and determining how success will be measured and tracked. These metrics should be part of the integration playbook and customized for each specific deal. At Progress, we also establish specific Key Performance Indicators (“KPIs”) at the start of each deal and track these for the first year to measure the status and health of the business and integration.
One major pitfall to avoid is working in silos. Organizational alignment is crucial and this means ensuring that the overarching M&A playbook is in sync with the different functions within the organization. For example, collaboration with the communications team, culture and organizational change experts and other relevant departments is necessary to build a comprehensive and effective plan.
Additionally, it's important to recognize that the person leading the integration may not be a subject matter expert in every area. Leveraging the expertise of those who know their business well is key to successful integration. Additionally, understanding that integration is a gradual process and may require interim steps before reaching the final goal is essential. This approach helps manage expectations and ensures a smoother transition.
Finally, learning from your experiences, and continuously making improvements is key. At Progress, we always conduct a retrospective assessment as the initial integration phase is winding down. This is an opportunity for the functional teams to share lessons learned and update their playbooks for more efficient executions next time.
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Can you tell us a bit about your role as the VP of Corporate Development and what M&A integration typically looks like from your perspective?
As the VP of Corporate Development, my role involves overseeing the integration of acquisitions within our organization. This includes strategic planning and execution phases to ensure smooth transitions during the merger process. A successful M&A integration requires focused attention and dedication to achieve overall success, achievement of an organization’s strategic objectives and delivering the return on investment of the acquisition.
In your experience, what are the key factors that determine whether an organization should have a dedicated role for M&A integration, and how does this role contribute to the success of the integration process?
In my experience, the key factors that determine whether an organization should have a dedicated role for M&A integration include the organization's strategy, frequency of acquisitions and expectations of the integration process. If M&A is a core part of an organization's strategy, having someone responsible for the integration of acquisitions is crucial. Integrating acquisitions is a complex undertaking and requires focused attention.
Corporate development practitioners aren't the only ones who can lead the integration process or develop the integration playbook. My role, for instance, doesn't always sit within corporate development; it can be positioned in different parts of the business, depending on the organization's structure. Many companies do a single deal without having someone dedicated to this role, which is why I was a consultant before joining Progress. Often, clients would bring me in for their first acquisition because they didn't have that role internally. Typically, I would train and mentor someone throughout the process and help them develop their playbook for future acquisitions.
Organizations benefit from having someone focused on integration full-time if M&A is a key part of their growth strategy, like it is in Progress. While the broader team can have other roles, having a dedicated individual ensures that integration doesn't become an afterthought or secondary priority. Without this focus, the success of the acquisition and the financial investment are at risk.
The entire M&A process is challenging, from sourcing a deal, to diligence and getting it over the finish line. But closing the deal is just the beginning. Integrating it well with the right priority and focus is what will determine if an acquisition is successful.
What are the essential roles and governance structures necessary for successful M&A integration, and how can organizations ensure these roles are clearly defined and effectively managed?
First, you need an executive champion who focuses on the strategic rationale of the acquisition while keeping the core business running. The integration leader partners with the executive champion to manage day-to-day integration activities. Depending on how an organization is structured, the integration leader may or may not report directly to the executive champion.
A steering committee, composed of senior leaders across key front office and back office business functions, provides oversight, guidance and serves as an escalation point, if needed. A cross-functional team of workstream leaders manage the specific areas of integration for their respective functions.
It's crucial to have a framework that enables the identification, alignment and management of interdependencies. For example, one of Progress’ best practices for M&A requires that each workstream has its own playbook that is customized into a detailed plan for each deal based on an acquisition’s unique deal profile and strategy. Together, all the plans feed into a master integration plan which is used to oversee and manage the overall integration. The result is alignment on interdependencies, effective risk management and increased efficiencies.
Identifying key employees and influencers within the acquired organization is also vital. Ideally, these individuals, whether at leadership levels or as respected contributors, would become part of the integration team and align with their functional counterparts to support the integration process and serve as change agents.
Can you share some key factors or strategies that companies should consider during the initial stages of M&A integration to ensure a smooth transition?
Successful M&A integration requires careful planning and consideration of several key factors. Developing a comprehensive playbook is one of the most effective strategies. This playbook serves as a guide through each phase of the deal process—from diligence to close, and through integration process to business as usual. The playbook ensures alignment across the organization and ensures a smooth transition throughout each phase of the deal lifecycle.
The playbook serves as a foundation and is customized based on the unique aspects of a deal and the insights gained during diligence, outlining the necessary steps and timeframes to meet strategic and organizational goals. This facilitates the development of a preliminary integration plan into the deal business case, learnings, risks and priorities identified during the diligence process.
Another key factor for success is bringing the integration leader into the process early. Ideally, the integration leader would be a part of the deal process right from the beginning of diligence. This enables them to put an operational lens on the business, formulate a plan for integration, support and guide the deal team on priorities, opportunities and risks and ensure a smooth transition from diligence to integration.
The initial phase of the integration process, from day one, through the first week and the next 90 days, is crucial. During this time, the focus should be on balancing integration, business continuity and value creation over the first 30, 60 and 90 days. Preliminary plans developed during diligence need to be validated, refined and executed. It's essential to integrate in accordance with the acquisition strategy without disrupting existing business operations. Business continuity is vital for both the acquired company and the core business, aiming to add value while maintaining operations. The playbook educates users on the why, what and how of the process, ensuring clarity on priorities and phases.
In addition, a comprehensive communication plan that ensures effective communication with all stakeholders, internal and external, is essential. Many acquirers come out of the gate strong with communication, but then it tapers off quickly. It is important to maintain a communication channel which is consistent, continuous and very transparent throughout the integration process to ensure a smooth transition for customers, partners and employees.
These key factors, along with the governance structure previously discussed, are critical to the successful integration of an acquisition.
How do you handle different regulations, cultures and other challenges when integrating a company?
Handling different regulations and cultures during company integration involves several key steps. The geographical location of your workforce significantly influences the profile of your deal. Different countries have varying statutory and compliance regulations as well as cultural differences that must be considered.
When acquiring a company without a sales ecosystem, leveraging your global presence can significantly grow the business. This involves optimizing value creation and operational efficiencies, especially when the acquired company is small.
Ensuring team alignment is also crucial. Everyone involved in the deal process should understand the strategic rationale behind the acquisition. This helps frame the right questions for diligence which, in turn, highlights key areas to focus on during the subsequent integration process.
Tight coordination and a smooth handover between the diligence and integration teams is vital. Ideally, there would be continuity across the teams so that the key decisions made during the diligence process are carried through the integration process effectively. Continuity in the team helps to ensure that there is no miscommunication and ample accountability for execution.
What are the key elements to consider when defining success in an M&A integration and how can organizations ensure alignment across different functions during this process?
Defining success in an M&A integration involves several critical steps. Firstly, it's important to establish clear goals and objectives for the acquisition, which should align with the strategic rationale behind the deal. This includes setting up guiding principles and determining how success will be measured and tracked. These metrics should be part of the integration playbook and customized for each specific deal. At Progress, we also establish specific Key Performance Indicators (“KPIs”) at the start of each deal and track these for the first year to measure the status and health of the business and integration.
One major pitfall to avoid is working in silos. Organizational alignment is crucial and this means ensuring that the overarching M&A playbook is in sync with the different functions within the organization. For example, collaboration with the communications team, culture and organizational change experts and other relevant departments is necessary to build a comprehensive and effective plan.
Additionally, it's important to recognize that the person leading the integration may not be a subject matter expert in every area. Leveraging the expertise of those who know their business well is key to successful integration. Additionally, understanding that integration is a gradual process and may require interim steps before reaching the final goal is essential. This approach helps manage expectations and ensures a smoother transition.
Finally, learning from your experiences, and continuously making improvements is key. At Progress, we always conduct a retrospective assessment as the initial integration phase is winding down. This is an opportunity for the functional teams to share lessons learned and update their playbooks for more efficient executions next time.
Continue reading...