Determining integration hand-off

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  • #94206
    Chris
    Participant

    The Challenge
    One of the major challenges at our company is drawing a line in the sand when an element of integration is now ready for hand-off ( business as usual ), to the appropriate division. The primary factors, in my observation, are poor communication and competing agendas. Poor communcation is common across many business functions as a company scales ( we are about 800 ). The competing agendas is an area that I believe derives from the lack of proper support from the executive team for the M&A team.
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    Some Examples
    We recently acquired 5 companies over the past 2.5 years. Our team was new to this and did not have a formal M&A Team in place. The first acquisition was small and intentionally used as a learning ground knowing that the acquisition of the talent was justification enough for the acquisition as a whole. The following 4 acquisitions were larger in scale and varied from complementary proprietary technology plays, to simply aquiring clients through business acquisition.
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    Small Acquisition
    The first small acquisition allowed us to get our feet under us, and for the most part the acquisition was on the corner of a few desks. We did have a corporate development officer skilled at due diligence and deal crafting, but we lacked a complete integration team. Due to the simplicity of the deal, we were able to create a basic playbook, along with general alignment across teams on expectations. However, due to the simplicity of the deal, the complexity the M&A motions for a larger deal were not properly recognized, and that set us up for challenges in future deals.
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    Adjacent Acquisition
    Our next acquisition was about 5 times the size in value and 3 times in size with regard to people. Again, we had an edge-case acquisition, and this time the decision was mae to let the acquisition run as an autonomous unit. There was no need to integrate teams or roadmaps. The only detailed integration happened at the HR level, and the experience from the first acquisition helped in this area. So now, we had even further established a false understanding of how complex an acquisition could be.
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    Product Integration Acquisitions
    The next two acquisitions were substantial, and required deep integration of technology products and teams. We really felt the pain during this integration. Due to the fact that previous acquisitions had kind of “worked themselves out”, the individuals on the m&a team ( not dedicated employees, but simply allocating a portion of their time for m&a ) were overwhelmed.
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    The Hand Off
    So now we are 4 acquisitions deep, and we still have not head clear hand-off on some elements of the first acquisition. The lines were blurred due to poor communication, competing agendas, and separate understanding of ownership. The executive now realizes that the integration step is real, and can be very expensive if not properly attended to. For example, a large number of unnecessary and overpaid employees were kept for over 6months as a result of poor communication and hand-off.
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    Next Steps
    Working closely with some key individuals, I have brought some best practices from m&a best practices training, books, and peer groups ( including this one ). Our CTO is fully bought in and has written some very good sets of documentation to assist in the future hand-off during integration. The CTO is crucial at our company as we are a SaaS product enterprise. We still do not have a dedicated m&a integration team, but there has been meaningful discussion and thinking around the area, and it looks promising as we move toward yet another acquisition.
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    Share Your Thoughts
    I am curious if others have experienced similar challenges, and what your approach was to achieve success.

    #95585
    LaurentG
    Participant

    Thanks for sharing Chris. Indeed, the hand-off is a crucial topic in my experience. And even more challenging when integrating an adjacent business, with different product lines, regulation, pricing, manufacturing strategy… How to ensure the acquiring company’s shared and global functions embrace the change and adjust their operating model accordingly? And as rightly pointed out, identifying the gaps is one topic, having them communicated and understood and is another one.
    To give a practical example, we had to onboard and train our internal audit teams to explain that the acquired company has different inventory and bill of material management because of the specifics of their business. And consequently, the audit checks should have been enriched accordingly.

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