FountainBlue’s December 2 VIP roundtable was on the topic of ‘M&A Best Practices’,and was graciously hosted by NetApp. The executives in attendance at this month’s roundtable represented a wide range of industries, roles, functions and company sizes. Therefore, their perspectives around the planning, envisioning and execution of a success merger, acquisition and integration vary greatly. However, there’s agreement that:
- Plan-fully envisioning and executing a successful M&A is a team effort.
- Transparent, strategic and ongoing communication between all affected parties is critical to the success of any integration.
- M&A deals are bigger and faster than they’ve been in the past, with the potential to transform markets and industries, with BIG companies buying each other, with companies buying new products, channels and markets, etc.
- Some companies are more ‘acquisition-minded’ than others. Those that are generally have a complex and comprehensive process to help ensure that the integration goes well end to end and generally measure specific data points, agreed prior to the initiation of a merger, whether the data is around innovation/technology deliverables or Gartner hype curve appearance, operational cost optimization or lowered support and outreach costs, improved distribution channels or larger footprint in specific geographies.
- The trend toward having a broader and more diverse, more demanding customer base will continue to evolve. Corporate M&A strategists will take this into account.
The collective advice of our executives is summarized below.
- When you are looking at best merger opportunities, consider not just the market landscape, customer base and technology fit, but look also at the cultural fit. Even if everything else fits well, the lack of cultural fit can immensely impact the success of a merger.
- Seasoned M&A leaders know the cycle of response around M&A events – from the ‘shock’ to the ‘work overload’ phase, and on to the ‘disillusionment’ and then the ‘acceptance’ phase, and on from there to the ‘search-for-the-next-deal’ phase. Sharing their stories and experience will help companies retain their best people through these high-change cycles.
- Understand their motivations and facilitate collaboration between stakeholders.
- Plan-fully and pro-actively manage the integration from beginning to end through an Integration Playbook highlighting People, Process and Technology details. Know when it’s business as usual for the integration, and when something is urgent, who which exec needs to respond in what manner in order to get the integration on track. Make sure that happens – the success of the deal may depend on it.
- Build relationships with all stakeholders. Know what their role is for the integration process. If possible, know also how they would respond to stress and change prior to their being subjected to it. Have a plan B if plan A may not work out.
- With ongoing communications based on measurable results, also include self-assessments. Make sure that everyone has the time and support and resources to deliver their piece of the puzzle to help keep the integration project on-track.
- Ensure clear and ongoing executive sponsorship throughout the M&A deal.
- No matter how much you plan for the merger, no matter how well it’s going, no matter how quickly or elegantly it’s coming together, there will be surprises and unintended consequences. Accept that this will happen, and respond and react using your best judgment, while aligning motivations and remaining transparent and communicative.
- Be clear on what must be done, what’s nice to be done, what doesn’t need to be done yet, and what will never happen. Negotiate with important stakeholders if you’re not in alignment on which buckets each objective or task fits in.
Below are how to best leverage mergers to grow a business.
- Identify adjacent markets and technologies location for expansion.
- Know the value and timing for fast organic group, for new market growth, for headcount growth, for industry consolidation, etc.,
- Find higher-margin services and customizations for low-margin businesses.
Again, please join me in thanking our participating execs and our hosts at NetApp.