Turning Deal Thesis Into Integration Objectives

"Every acquisition has a high requirement for leadership decision-making." - Chris von Bogdandy

According to Chris, almost 12% of the revenue declines within the first month after the acquisition. If you're doing a deal that is revenue-carrying, your target company will have a pipeline. And that pipeline goes soft overtime.

Also, 60 to 70% of productivity drops. Most employees that you acquire don't feel engaged. They did not choose you to be their employer, and they are not entering your company with a blank slate. Most acquirers treat them like newly hired employees. This leads to 33% of the employees leaving within the first year. 

The problem starts when the corporate development hands over a deal thesis. The immediate reaction of the functional leaders is how does it affect their function. A very siloed perspective where they will plan the integration on their own function only. 

In the end, you don't really have an integration plan and integration overall approach that is geared towards realizing the deal thesis. You need an integration plan that is really strongly anchored in the deal thesis. Here are the steps of achieving that goal:

Short-term vs Long-term Objectives

After the deal thesis, you need to start thinking about short-term and long-term integration objectives. Some things need immediate attention, and there are things that you won't be able to do in a short period of time. 

For instance, you are closing a facility or a campus. This is obviously a long-term objective as you cannot close a facility in a week. There are also short-term objectives such as the go-to-market. You need to figure out how you are going to sell the newly acquired product and communicate that with the integration team. 

Make Cornerstone Decisions

The next thing that you want to focus on is the cornerstone decisions. Leaders will have so many decisions to make in a concise timeframe, and the decision-making velocity will have a significant impact on the integration teams. One of the cornerstone decisions that always needs to be answered is brand. Are you going to keep the brand? Are you keeping part of the brand? How do you intend to do that?

If leaders don't have cornerstone decisions made early on in the deal, the integration teams will run circles and will be held up. You need to define what the cornerstone decisions are, make as many as possible. 

Develop the Governance Structure

Sure you have a lot of different functions in your organization, but they are all siloed and that's not what you need. You need to create a cross-functional team around your objectives. The best example would be assembling a product team. This team would comprise of a marketing person, engineering, finance, and sales.

Metrics to Measure Integration

There are three types of metrics that you need to track:

  1. Synergy metrics - These are the deal thesis metrics around revenue and margins. 
  2. Operational metrics - These are customer churn and retention.
  3. Milestones Metrics - These are system integration, product roadmap, and finalization.

Define Integration Experience

You need to define how the people are going to perceive the integration. From an employee perspective, they are only going to see the key events in the deal:

  • Announcement
  • Meeting with the managers
  • Signing of the offer letter
  • Seeing the new org structure
  • Getting the swag

This needs to be a positive experience to avoid the decline in productivity. 

Define Integration Milestones 

Finally, you can now start planning the Integration milestones. Define what you need to accomplish for day one and day 100 and build a roadmap with the leadership and the integration team. 

Conclusion

Values leak in deals all the time because the integration planning often loses sight of the deal thesis. These are some of the steps you can take to ensure that the deal thesis is always at the forefront of your integration planning.