25 January 2017
This blog post is part of a three part series on the best ways to extract value from mergers and acquisitions. Read part one here.
Resolve the people issues quickly
Selection of the best people from both organisations and an ambitious deadline for filling key positions is another priority. It reduces the risks of staff being poached by competitors when they are often most vulnerable to attack. The most impressive organisations identify their new leaders early and then quickly fill in the other levels. As a result they are faster in responding to the risk of flight of talent and customers, and quicker with integration.
Maintain focus in both entities and monitor performance closely
It's easy for people in an organisation and a target organisation to become absorbed by the deal process and then the complexity of integrating organisations - the future shape of the group is in the hands of only a few individuals. In our experience, management teams do not allow all the executives or the organisation to become distracted; otherwise the base business of both companies will suffer. If everybody's trying to manage both the ongoing business and the integration, nobody will do either well. The operations of the existing business must not be adversely affected due to the integration.
Transfer of skills between entities
In our experience corporate acquirers can materially improve the performance of an acquisition by selectively transferring skills, assets, or capabilities. Companies that focus purely on what they are going to get from an acquisition are less likely to succeed than those that focus on what they have to give it. This may occur through the redeployment of specific personnel and is usually aimed at functional areas of the business. The capabilities should be important to competitive advantage and more highly developed in the acquirer than in the acquisition. Alternatively an acquirer able to share a capability or an asset can also add immediate value. The acquiring company doesn’t need to move personnel or reassign assets, just makes them available.
The final part in this series, which will discuss further ways to maximise the value of a merger or acquisition, can be read here.
For further information, please contact me or your local UHY corporate finance specialist. If you want to read more about the latest corporate finance issues, please see our other blog posts here.
