Mar 2015 Chairman's Message: "The Need for Speed" in M&A Integration

By Jim Jeffries, Chairman, M&A Leadership Council

 

Element 1 in the S3 Guidance Model: Speed 

One of the world’s great CEOs, who became famous for growth by acquisitions, was Jack Welch, during his tenure at GE.  Jack has often said about M&A Integration, as he also did about business in general, “If you’re not fast, you can’t win.  Speed is everything.”  He often went on to say, “Bureaucracy is terrified of speed.”  Thanks, Jack and I agree. 

In last month’s M&A Monthly, I outlined the components of the S3 Guidance Model shown below and their interactions with one another to drive success in M&A Integration.  Over the next few issues, we’ll dissect all of these elements (Speed, Synergies and Stability), starting this month with “The Need for Speed.”

Speed is one of the reasons that successful M&A Integration is often counterintuitive to normal business practices and tenets.  In our typical world of inclusive management practices and the search for the perfect decision, our day-to-day businesses may run well as long as we stick to a rhythm and culture that is consistent.  But when the business has the opportunity to grow inorganically by 10-50% or even double the size of the business, normal day-to-day practices may need to be substituted by methods and practices that will assure 1) value preservation and 2) value creation through the acquisition cycle.
 

The Interim Culture of M&A

Many companies who have a powerful culture (good or bad) may need to strategically manage to an interim culture during the Integration period.  The following examples may run countercultural to the way the business normally operates, but should be considered critical for speed and successful outcomes.

Examples:

Decision-Making – Decisions should be made in minutes, not days or weeks.  Decisions must be made face-to-face, not memo-to-memo or by E- or voicemail.  Try to establish one decision maker for each deal and that person be supported by a steering team that receives and filters everything that is taking place beneath it.  Once the information is properly filtered and validated, decisions can be brought to the “Owner” and a decision made.  Also, try to eliminate hierarchical layers and allow for much more decision authority at the level of implementation.  Authorize leaders to be leaders.

Preparation – Rigorous due diligence, advanced detailed planning and preliminary decision-making are important contributors to speed.  Opportunities and issues must be validated in advance of the integration and an Integration Strategy should link Diligence actions and findings to the emerging Integration plan.

Flattening the Integration Organization – Consider having one Decision Maker, three to five on the Steering Team, full-time functional leads driving the Integration Action Teams (IAT’s) and cross-functional leaders for Synergy Action Teams (SAT’s).  IAT and SAT leads report to the IMO (Integration Management Office), which reports status and issues to the Steering Team, who filters and validates before presenting issues and decision requirements to the Decision Maker.

Leveraging Today’s Technology for Transparency – There are wonderful software tools that go way beyond spreadsheets and conference calls for monitoring all issues, actions, workflow and documents needed for successful M&A execution.  Once the M&A community adapts to the use of these tools, we will see the efficiency and effectives increase dramatically.

Next month we will take on the topic of Synergies and why most deals fail to deliver on their promises.

Until next month,

Jim