CMAS Career Corner - May 2020

The Art of M&A - Integration 
An excerpt from The Art of M&A by Alexandra Reed Lajoux

 

Editor’s Note: A growing number of M&A professionals are pursuing the Certified M&A Specialist, or CMAS® credential. To support CMAS® candidates preparing for the CMAS® exam, we are pleased to continue our feature column, CMAS® Corner, by noted author and expert, Alexandra Reed Lajoux. Each  edition includes directly relevant content derived from the capstone Fifth Edition of Ms. Lajoux’s industry leading book series, The Art of M&A Fifth Edition: A Merger, Acquisition, and Buyout Guide (McGraw Hill, 2019). Every column covers one or more likely CMAS® exam questions and help you accelerate completion of this important career credential.  In April we covered due diligence.  This issue’s topic is integration.     

 

Question 1: What are the key IT items to focus on for Day 1–Day 100 as a key milestone?  

The first 90 to 100 days of any deal are critical.  

  • First, this period sets the tone for the new entity—for culture, for employees, and for speed to combine the two entities.  

  • Second, it typically will involve combined financial reporting.  

  • Third, this period is usually when combined senior leadership is identified. 

Additionally, this time frame is critical for information technology. People need to be able to collaborate effectively, technology platforms need to remain secure, and businesses cannot lose productivity. However, technology is the backbone of all integrations; therefore, it cannot remain stagnant. The balance to achieve this should be the first area of focus post-deal close.  

To illustrate this, the exhibit below shows a sample plan for 30-, 60-, and 90+-day milestones. 

Sample Plan for 30-, 60-, and 90+-Day Milestones 

 

Question 2: What is “change management” all about for companies involved in merger integration? 

Change management addresses the people side of change and, when addressed holistically, can increase the chances of integration success. Some common change management models1 are:     

  • Bridges’s transition model (letting go, neutrality, new beginning)     

  • Kotter’s theory (eight steps from creating sense of urgency to setting change in stone)     

  • Kübler-Ross’s change curve (denial, anger, bargaining, depression, acceptance)     

  • Lewin’s model (unfreeze, change, refreeze)     

  • McKinsey’s 7-S model (strategy, structure, systems, shared values, style, staff, skills)     

  • Prosci’s ADKAR model (awareness, desire, knowledge, ability, reinforcement)     

  • Satir’s model (old status quo, resistance, chaos, integration, new status quo)     

  • Thaler and Sunstein’s “Nudge” approach (presenting changes incrementally)  

According to Prosci, projects that incorporate change management are six times more likely to achieve their objectives.2 Change management should be woven into the integration plan as opposed to existing as a separate workstream. Whatever approach is used, change management activities should support and reinforce the tasks and actions identified in the integration work. 

Footnotes:  

  1. For more on these models, see Ben Mullholland, “Eight Critical Change Management Models to Evolve and Survive,” https://www.process.st/change-management-models/ 

  1. Time Creasey, “The Correlation Between Change Management and Project Success,” in an undated blog citing a 2018 study. https://blog.prosci.com/the-correlation-between-change-management-and-project-success.  

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Lajoux, Alexandra Reed with Capital Expert Services.  “The Art of M&A, Fifth Edition” A Merger, Acquisition, and Buyout Guide. United States of America: McGraw Hill, 2019, pp. 806, 823-824. Print. 
You can learn more about the book at: https://www.artofma.global/