M&A integration is the ultimate business makeover, where two entities merge into a stronger, more profitable version of themselves. By prioritizing M&A integration, corporate development teams can reap the benefits of their strategy and quickly grow the organization. However, despite its potential, M&A integration is frequently neglected. In this article, Brent Campbell, Vice President of Corporate Development and Strategy at Alight Solutions, discusses how to focus on integration as a corporate development professional.
“Without a proper integration process and dedicated resources, you can turn a win into a loss fairly quickly.” – Brent Campbell
During integration, speed is everything. Any delays in the integration execution can have serious consequences, including the loss of valuable talent, clients, and market momentum. As soon as the acquisition is announced, stakeholders, such as clients and employees, will be excited or nervous about the upcoming changes. If integration is taking longer than promised, it can create confusion and uncertainty among stakeholders.
To avoid these negative outcomes, prioritize integration right from the beginning of the deal. Ensure continuity between the deal team and the integration team, and maintain good speed during execution. By doing so, companies can achieve the desired outcomes and maximize the value of the deal.
The first step is to align with the strategy of the acquisition. Brent works directly with their Chief Strategy Officer, helping him understand the purpose of the acquisition before they even identify a target.
Then they work with the business leader to get them up to speed and ensure alignment because they are the ones who will run the business post-close.
The biggest step towards integration is maintaining involvement post-acquisition. Most corporate development teams move on to the next deal after the transaction has been signed, which can hurt value creation. Having someone involved in the deal right from the start will be highly beneficial when challenges arise during integration.
Integration is never perfect, and corporate development can help solve problems and avoid miscommunications during the tedious process.
Cultural fit is one of the biggest problems during integration. Corporate development must focus on cultural diligence as early as possible to minimize risks and ensure better integration. Brent assesses the target company's culture through conversations with the management team and key employees. On the other hand, workstreams are also working with their counterparts that help assess cultural fit.
Knowing the success metrics will help corporate development focus on the right things during diligence and integration planning. According to Brent, there are two common metrics that indicate integration’s success:
Employee retention rates can be a key indicator of integration success, as high turnover rates can indicate cultural mismatches or other issues. Employee attrition will ultimately lead to business disruption, which will harm the acquired business.
Integration is considered a success if the team achieved their initial business plan. By revisiting the deal post-mortem, teams can understand how far they have deviated from the plan. The closer they are to the initial business plan signifies how well the team executed the projected value drivers of the deal.