8 Steps to a Post-Acquisition Integration Success

Post-Merger IntegratIon pic skinny

Contributed by Bridgepoint Consulting

How Private Equity Firms Can Accelerate Time-to-Value After an Acquisition

Growing by acquisition is a popular private equity strategy. After the deal closes, the investors expect a real uptick in EBITDA by leveraging synergies. Except that does not happen automatically. The real challenges start after the deal closes.

Combining complementary businesses to gain market shares is a common strategy. However, many companies struggle because they underestimate the complex effort involved in integrating the two entities. Consequently, investors experience delays in returns on their investment. Many investors and companies underestimate the difficulty of the integration process and they fail to plan and allocate resources appropriately. In the end, the integration goes poorly, delaying or even derailing the expected benefits.

So, how do you ensure a smooth and truly effective integration of people, processes and systems that enables more rapid time to value? Here are 8 critical guidelines based on our successful track record with multiple private equity clients in the post-acquisition integration phase.

DESIGNATE AN INTEGRATION TEAM LEADER – Someone must spearhead the process. Generally, the designated change agent is the CFO of the parent company, but it can also be an experienced controller or other senior finance leaders who have the bandwidth to develop and own the integration plan—from start to finish and authority to drive the process. The team leader must possess the adequate skill set, resources, and ownership to drive integration forward. This leader must have designated time to be fully focused on the integration. Using an “after-hours approach,” to an integration process will prove unsuccessful and waste precious time.

IDENTIFY THE ACQUISITION GOALS & DESIRED FUTURE STATE – First and foremost, identify why you did the deal. This will help you to understand the primary sources of value around the acquisition and ensure these are incorporated in the integration. Key drivers include:

  • The efficiency and scalability of the combined financial processes
  • Systems leveraged to support the new entity.
Once the goal is defined, the integration plan can start to take shape. A good plan takes into account all of the short-term integration tasks as well as long-term strategic goals that will shape the company’s future. There is no doubt that adjustments will be made along the way, but starting with a focus on the end goal helps to ensure strategic decision-making along the way.

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