A common issue we hear from attendees to our M&A workshops and others is the lack of dedicated, qualified resources to effectively manage the integration effort. Most companies are typically “lean and mean,” with everyone already having full-time jobs. So how do you handle the demands required to drive the integration effort? Here are recommended alternatives to handling the shortage of resources we all typically face in a business integration effort.
Balancing: Having a small, dedicated team driving the integration while the bulk of the organization is focused on driving the day-to-day business operations. A term we use is 90/10 and 10/90: in other words have 90% plus of the people in each organization focusing 90% of their effort on running the day-to-day and less than 10% of their time on the integration; conversely 10% (or less) dedicating 90% of their time on the integration and 10% to the on-going business. This is only through the pre-close and the early stages of post-close until you begin transitioning to the “steady state,” at which time, while the integration is not complete, the focus becomes more of the “business of the business.”
Salami Method: Taking a “slice” of senior executives/business managers to set directions, review progress, and be involved at short intervals for updates and feedback on the integration planning and management, while keeping primarily focused on the daily business. This keeps them involved in the key integration activities, but requires only 5-10% of their time in those areas that require business decisions or strategic direction.
Professional Development: Assigning the senior functional leader to the due diligence/integration roles while charging their key lieutenants to temporarily run the daily operations. This leverages the expertise of the senior person to deal with the complexities and challenges of the integration while creating an opportunity for their key lieutenants to rise to the challenge of increased responsibilities, as well as develop their professional skills and experiences in a larger job role. The senior executive still can spend 10-20% of their time keeping a pulse on the daily business and mentoring their key lieutenant(s) to success.
Just-in-Time Resources and Expertise: Leveraging outside resources with the requisite expertise and experience in key areas not resident in-house (e.g. M&A processes, methodologies and tools; complex program management; and change management) or not available for full-time dedication to the integration effort (e.g. functional or industry experts). The advantage is that they can be brought in and only used during the critical periods and/or heavy workloads of the integration effort. The key is to retain control and ownership of the integration and use them in a staff support, coaching, and advisory role to help drive the effort.
Initiatives Review to Free Up Resources: At any time in an organization, company resources are tied up in a number of business initiatives. This is true for both the acquiring company and the acquired company. We recommend a review of all current initiatives underway (in all functional areas and in both companies) to determine which initiatives can be canceled, delayed, or narrowed in scope. This then frees up resources who can then be redeployed for what should be more business-critical and higher valued integration priorities. Once the two business start moving to the steady state then these resources can be refocused on business optimization and continuous improvement projects.
Ruthless Prioritization: This recommendation is related to the previous point. The key is that, during integration planning and implementation, on any given day there are critical activities to perform while others may be important or just nice-to-have. The focus at each stage of the integration (due diligence, integration planning, transition management, and full-scale integration) is to identify and execute only on the critical tasks today, deal with the important ones tomorrow, and push off the nice-to-haves until a much later date. As we discuss in the Art of M&A workshops, the first focus should be on value preservation, then value realization and finally value creation. The filter for prioritization should be driven by our acquisition and integration objectives as well as the expected areas for delivering shareholder value.
Use of a Corporate Playbook: During the “heat of battle” in an acquisition and integration, we have to focus on getting the work one, not spending critical time figuring out the “what, when, and the how”. These should have already been previously developed and residing in the corporate M&A Playbook available for just-in-time use. Effective development and use of an M&A Playbook compresses the time necessary to accomplish a task, increases the quality of the task performed, and frees up resources to spend more time on the highest value activities.
Leverage Key Assets from the Acquired Company: Some of the best and most available resources to use in key integration activities are people who are part of the acquired company. They know their business and their staff better than anyone in the acquiring company and if approached right and treated properly will accomplish the task at hand very effectively. Even on a transition basis, if the rewards and recognitions are properly outlined, they can fill the much needed resource requirement while others focus on the core business.
As stated earlier, having adequate resources dedicated to the integration effort is a major effort most of us face. While it is critical to effectively drive the integration with a focus on speed, synergy and stability, it is also critical that we keep the bulk of the organization focused on running the businesses more effectively than ever before so we have no erosion of value. Hopefully the suggestions above, gathered from the experiences of the M&A workshop leaders and meeting attendees will be beneficial to you as you address the ongoing issue of effectively resourcing and supporting a business acquisition and integration effort.
About the Author: Jack Prouty is the managing partner of Prouty, Montgomery and Partners (PM+P) and a subject matter expert in the field of mergers and integrations. He has over thirty years of line management and consulting experience working with Fortune 1000 companies on effectively integrating acquired companies, repositioning/transforming their business for improved market success and conducting large scale change programs for bottom-line benefits. Mr. Prouty’s work has stretched across the life cycle of transactions: acquisitions, mergers, consolidations, joint ventures, divestitures, and roll-ups.