January 10
M&A Science Live - The Evolution of M&A Functions
September 5, 2022

Integration is one of the most challenging and crucial parts of M&A. It requires a complete understanding of the parent company and the newly acquired business. If done right, it will allow acquirers to capture intended synergies and maximize the value of their transaction. It is why having a dedicated integration function can be extremely valuable to an organization. Let's all learn how to stand up an IMO function with​​ Joshua Zatkin-Steres, Head of M&A Integration at Zuora. 

"If you want to de-risk new deals, it behooves you to have someone in seat, on team, who understands the overall business, has relationships with key functional leaders, and can help connect all the dots." - Joshua Zatkin-Steres

When to Consider Building an IMO

As soon as acquisitions become a part of a company's growth strategy, start building an IMO. The sooner, the better. Especially if there are many deals in the pipeline and the company is doing two or more deals a year. Also, if the types of transactions are all different, having a dedicated person or a team that has tribal knowledge of how to get things done is paramount to success. 

Benefits of IMO

Having a dedicated integration function will ensure everyone remembers the deal rationale. Being involved early in the process allows the IMO to achieve alignment with everyone on the deal team for more significant value creation. 

They could also be the one who engages the target company's leadership to solve their problem. Because they are the ones who will be leading the integration, they can set more realistic expectations for the incoming team. 

Lastly, a dedicated function allows a company to retain learning experience so their process can mature and improve over time. Continuous improvement of M&A is crucial for proactive acquirers to de-risk future deals. 

Steps to Standing Up an IMO Function

If the company is making a lot of small acquisitions, the integration team time should sit in an operations-focused organization. However, if a company is making big acquisitions that are highly strategic, the IMO function must sit within corporate development. According to Joshua, there are two core elements of an IMO: People and Playbooks.

1. People - the IMO needs to understand the organization better than anyone else in the company. Like any other leadership role, talking to everyone on the team is essential. M&A touches almost every facet of an organization. Building relationships with business leaders in every function is critical. Understanding their thoughts and priorities is also vital to the integration role.  

2. Playbooks - If there is an existing corporate development playbook, use that and create an integration side playbook. If none, spend 3 to 6 months working alongside deals and developing an integration playbook from scratch. 

Build a playbook for each function, and should contain the following:

a. What their role is 

b. Who on their team should be involved 

c. What are the expectations from each people involved

d. What they should be working on 

e. How to approach integrations 

f. What are the critical dependencies of their workstream

Every deal is different; therefore, playbooks should not be a step-by-step process for doing the work.

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