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How will a significant acquisition affect you: The top 5 things you need to know

By Simon Wise, Director, Karumba Consulting 


Are you leading the IT and technology department?  Or are you the HR Director, Legal Director or heading up the corporate development team?  And is your team currently, or soon to be, dealing with integrating a significant acquisition?  If so, what may seem like ‘an extra bit of your workload’ could quickly become hugely disruptive if you are not armed with the possible challenges in advance. 


That’s where we come in.  We’ve consulted on numerous large-scale divestments and know that the points of pain usually have common themes.  So, we’ve compiled a list of the top 5 things you need to prepare for, and do, so they don’t catch you and your team out! 


1.Plan on how to maintain your BAU roadmap 

On the date of deal completion there can be confusion as to which roadmap you take forward and who owns that.  The business you have purchased will evolve during the time between deal announcement and deal close and will have their own function roadmaps in progress and you will also have had to maintain your own roadmap throughout the deal process in order to keep BAU running smoothly.  This means you need to be involved in the roadmap for the function of the business you are buying throughout the deal process to avoid surprises over that period.   


There will be some arms-length relationships until the deal closes but relationship management and communication is key. Ensuring  accurate information is shared between both parties throughout this time is equally important, but don’t expect absolute transparency until after deal close.  


The integration roadmap is likely to be the top thing on your mind but doing solid due diligence is more important.  Understanding the nature of the business you are buying, the business processes and the complexity of any disentanglement is by far the most important aspect to ensure the success of your acquisition.  


2. Be significantly involved in developing the Transition Service Agreement 


It can be argued that the work to integrate a business is easier than trying to separate a business, but it can be made extremely difficult if upfront due diligence is not done or is not done thoroughly.  And this is not just the job of the corporate development or M&A teams. 


Put simply, if you don’t know what you are buying you are likely to uncover all sorts of interesting surprises when the deal is complete, and these could impact you from creating a mountain of extra work to a serious security risk and significant revenue loss.   


It’s important you are an integral part of developing the Transition Service Agreement associated with the deal, and that you oversee the technology due diligence, making sure it is as accurate and as thorough as possible; reputation and risk management are real concerns.   


3.Protecting and securing your key people 


As soon as the deal is announced it’s critical to quickly decide which key people you would like to ensure stay through the deal process and for at least a period afterwards.  Having been on both sides of deals in the past I’ve seen the speed at which productivity drops and good people leave once an acquisition has been announced.   


The uncertainty about job security, cultural change, working conditions and many other reasons effect people at all levels and on both sides of a deal.  Methods such as offering a bonus incentive over a period time post deal completion, securing reporting lines key individuals, meaty roles during the deal process and an outline of their future role, are all things that really help reduce attrition.  


4. Handover of security responsibilities 


The minute the deal is complete your organisation is reputationally liable for lapses in cyber security – something that in today’s data age will affect all companies.  This can be tricky if you don’t have clarity of what you are going to be taking over – another reason why comprehensive, upfront due diligence is critical.   


You will inherit technologies, processes and projects that have some issues and you’ll need time to resolve that.  It’s ideal if you have an external 3rd party, who has experience of security within acquisition scenarios, particularly around integrating various systems and databases, on standby to help you to resolve any unforeseen problems.  


There’s also the aspect of merging, or aligning, this new security environment with your existing one.  There might be different tooling and reporting techniques and styles, different monitoring approaches etc.  You may also acquire staff that have not had experience of an M&A environment and may think that everything should knit together easily.   


All this means that on day one there can be a lot of new discoveries, unknowns, and an increased risk to the overall safety of your business.  But this can be mitigated as much as possible through the deal process with solid due diligence, good communication and a plan of action for when the deal is complete. 

5.Smart and timely integration 


Once the deal has completed, in theory you can negotiate your own timeline to integrate the newly acquired business into your existing business – whether that’s in terms of branding, people, policies and systems.  But the real value from an acquisition comes from streamlining and integrating as many elements that add value as quickly as possible.   


Identifying where you have synergies, where you can gain economies of scale and where you can converge vendors and mapping out the timeline for this will enable you to realise the potential of the acquisition much faster.   


You’ll need a strategy and a plan for doing this that is well communicated across the business and you’ll no doubt find that there will be many different demands and priorities from each function, and so it falls to function directors to lead and co-ordinate the change programme, the communications and own the timeline. 


To discuss any of the topics above, or to discuss your own M&A challenges, contact us below.



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