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November 14, 2022

Integration is where value is created regardless of what happened during negotiations and diligence. However, an acquirer can destroy a target company if integration is poorly executed. Therefore, ensuring the acquired business is in good hands is imperative. This article discusses how to execute an effective M&A integration handoff featuring Keith Crawford, Global Head of Corporate Development / M&A - State Street. 

"The future performance of a business isn't reliant on any negotiation of price or terms. Instead, we want to acquire something that performs, and it's all about integration." - Keith Crawford

Importance of Integration Handoff

According to Keith, M&A transpires because companies are excited about the future performance of a business. For a business to be successful in the future, integration must be the focus of everyone involved in the deal. 

The integration handoff should be done by individuals that understand how to bring the two organizations together. The goal is to ensure business continuity while maintaining the target company's integrity and core. The transaction's success depends on how well it performs under new ownership.

Components of an Effective handoff

An effective handoff can set up a business for success. There are three must-haves of an effective integration handoff:

  1. A strong business sponsor - Have a dedicated business sponsor who will inherit and operate the business post-close. This person should be willing to take full responsibility for the business's performance and ensure that people, culture, and clients will be addressed appropriately. Deals will never succeed without a strong business sponsor to convey the strategic vision of the transaction.
  1. Strategic vision - Another crucial component of an effective handoff is a solid strategic vision behind the acquisition. A strategic vision needs to anticipate the industry’s future, the client's needs, and what the competitors are doing. A strategic vision will help assess if the acquisition is going to help the organization or not.
  1. People Alignment - There will always be multiple business leaders fighting over capital allocation in an organization. However, everyone should want what's best for the company and to increase shareholder value. Everyone involved in the deal needs to  support the underlying acquisition. Avoid creating friction inside the company by communicating the strategy behind the investment. 

Working with Business Leaders

Some organization’s business leaders have less than ideal reasons for seeking out M&A, over-optimistic, aggressive, and defensive. Objectively understanding each business leader’s ideas and communicating with transparency is key to a good relationship. 

Work to gain the business leaders’ trust and respect by helping them in their unit in the best way possible. Provide the business leaders with experts and help them address issues that arise from the transaction. Be deliberate and honest on the areas that they should be focusing on. 

A dedicated business leader should continue to communicate with their team and convey the strategic vision of the transaction.

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