April 7, 2015
They Are All Big Deals – Tips for A Successful Business Acquisition
By Joseph Eneldas
If you are purchasing an existing business to add into your own, you are taking a step that involves a lot of terrific potential but also a lot of risk. In truth, a considerable portion of company mergers fail.
But there is a lot to you can do to tilt those odds more in your favor. They are all part of the business alchemy known as Acquisition Integration. Let’s take a look at a couple of the key elements of integration success to familiarize and equip you.
The single-most important step that you can take to make business acquisition succeed is this:
Acknowledge the fact that merging two companies is not the same as running two companies… or even running one big company.
If you accept that premise, you will approach the integration process with more awareness and more thoroughness and you will be much more likely to succeed. Period!
Why is that so? Because running a company is largely about maintaining and optimizing existing systems. Merging two companies is about changing them.
There is no project that will affect more corners of your company, more of your staff, and more of your outside stakeholders than a merger. None. So the odds are that something somewhere will go wrong if you don’t play the integration game mindfully.
Here are ten useful tidbits to get you started on the road to properly integrating your next acquisition:
- Never ever lose sight of the strategic rationale for the acquisition. “Why are we doing this deal?” Tattoo that question on the back of your right hand.
- Start the integration at the strategic planning phase of your deal process and keep it going much longer than would seem necessary. It affects everything and its stumbling blocks can be very subtle.
- Appoint a special team to manage the integration process. Treat them as the biggest value creation opportunity that your company has. Put one person in charge who, if at all possible, has no other “day job.”
- Err heavily on the side of over-communicating. The time to guard secrets is not when your company’s work environment is at its most turbulent and uncertain.
- Go fast. Make decisions as quickly as possible. Think well ahead and wait only for good information, not perfect.
- Speed and communication are particularly important when dealing with people, i.e., your staff, your customers, your investors, your suppliers. People worry, assets don’t.
- Financial and legal matters represent only the tiniest fraction of effective due diligence. “How is this actually going to work?” Tattoo that question on the back of your left hand.
- A short due diligence checklist that is based firmly on strategic rationale and achieving operational excellence AND is prioritized is way better than a gigantic list of random pretty-good things to do.
- Target a few key metrics to measure your progress against your strategic objectives and share that progress regularly around the combined companies.
- Identify a couple of “quick wins” that can be used to reinforce to all your stakeholders the intent and the benefits of the business acquisition.
It is entirely possible to tilt the bad odds of acquisition history in your favor with effective integration. It will cost money and time but is a proven tipping point in the value creation art of doing deals.
Douglas Yorke is Managing Partner of Rumson Acquisitions. He created Rumson Acquisitions to help smaller and less frequent acquirers realize the value of their corporate development investments by providing acquisition preparedness, integration expertise and ongoing integration management services for deals ranging in size from $3-30 million. You may follow Mr. Yorke’s commentary on acquisition integration at http://mergerverger.com.
About A Neumann & Associates, LLC
A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or firstname.lastname@example.org