How to Modernize IMO / Building a Synergy Plan that Actually Delivers
We're sharing an interview we had in our M&A virtual conference that talks about how to modernize IMO, and building a synergy plan that actually delivers. This interview was hosted by Jonathan Shiery, Director at Guidehouse, with the guest panel Bill Clarkin, Head, M&A at BMO Financial Group.
They discuss the seven principles you should follow in order to modernize IMO including flexibility, the importance of documentation, and setting a hard deadline. Learn from their extensive and impressive backgrounds and hear about experiences they've learned from that you can avoid.
How to Modernize IMO: Flex Ready and Best Practices
IMO, or Integration Management Office, serves as the “Grand Central Station” for each acquisition, working to be a connection point and aligning force for stakeholders throughout the deal stages, especially integration. For larger serial acquirers, the IMO can be a permanent, full time unit; however, this is most often not the case so those traditionally part of the IMO must be able to “flex” and jump into action quickly.
Just as athletes train in the off season, IMO team members in waiting must keep their muscles sharp and remain familiar with the principles and plays that both modernize IMO and help them build a plan that wins powerful results.
For additional resources about how to modernize and rethink integration, check out this webinar "Why Everything You've Been Told About Integration is Wrong."
IMO Principle #1: Bench Strength Creates Rapid Flexibility
IMO team members can develop their own spring training via quarterly checkpoints and check-ins that involve test plays; one benefit of this is establishing a cadence. Better yet, for IMO leaders, this provides opportunities to early, and fairly easily, identify who their “go to” people are.
What bench strength skills and talents should integration management office leaders be looking for?
Patience (in terms of understanding there are certain things during a deal that are out of your control) and a steady personality (someone who does not let emotions get too high or too low - you do not want someone who will add stress during an already stressful time) are key.
Team members should be able to dig into the details, without losing sight of the team’s big picture/goal. It should also be noted, depending upon the deal, you might want specific technical skills on your bench.
Finally, being ready to flex and building a powerful bench also means keeping your M&A muscle strong by reviewing past deals. When teams only focus on the current deal and then disperse, they weaken their M&A muscle and lose out on valuable information. Overall, it is clear in today’s market and business world, it is critical for the IMO team to be ready and resilient.
IMO Principle #2: The Pen is Mightier Than the Sword
Perhaps the best way to early on set up an integration management office for success is to have the IMO leader have a seat at the table. The IMO leader must be privy to the information and conversations taking place from the very beginning of deal discussions.
Additionally, this leader must foster a robust relationship with legal as a deal moves toward negotiations; this means documenting everything and having everything cleared by legal. Relating back to principle #1, here again you cannot be led by emotion - you must use the power of the pen to establish your effectiveness.
IMO Principle #3: Climb the Mountain
After the deal is announced, you begin climbing the mountain.
What does this mean?
It means the work taking place is not easy work - it involves long hours, can involve a great deal of travel, and might not be for everyone. Expert practitioners caution that a work/life balance must be struck here. This does not mean that climbing the mountain is without benefits; it also involves meeting new people and providing opportunities to learn new cultures and technologies.
A pro-tip here is that the leader of the integration management office should invite some of these new people to lunch to build trust and develop a good working relationship with them. On the downside of climbing the mountain, you may have people who are not aligned with the goals and skill sets you need to reach the peak.
What happens in these situations?
You might have to cut these people loose, especially if trust is broken or expectations are not aligned. This does not mean the overall positive influence of the integration management office leader is weakened.
IMO Principles #4 & #5: Speed is Key and Do Not Delay
Principles 4 & 5 go well together because time works against you in M&A. A tendency during the life cycle of the deal is to delay decisions and fall into the “analysis by paralysis” trap.
Why is keeping pace key?
You must move quickly to capture value; remember, you made the deal for a reason - stay focused on that reason. It is human nature to want to delay because we often think things will get better later on, or we can make a better decision by overanalyzing. Fight against this tendency by staying focused on your target date.
This can be challenging because there will always be some people who say the date is unrealistic, but experienced practitioners still say, “do not delay.”
Delays can take 3-6 months to replan, which adds increased difficulties and challenges to an already challenging time. Being agile and knowing how to problem solve can help you avoid delays.
The “do not delay” maxim applies to synergies as well. Working towards capturing deal synergies helps build a culture where people are held accountable and everyone is responsible for meeting goals and hitting numbers.
IMO Principle #6: 80% is the Right Answer
Another way to remain on pace and avoid delays is to follow the motto “80% is the right answer.” Delays are caused by too much information and analysis. Spending that extra 20% analyzing and re-analyzing everything does not equate to higher success or fewer mistakes.
IMO Principle #7:Talk Isn’t Cheap
Talk isn’t cheap refers to the atmosphere surrounding a deal that is cultivated by integration management office leadership. As alluded to earlier, keeping a positive attitude is essential as it helps keep others focused and allows for the little victories to be celebrated, which ultimately propels everyone forward.
It is not easy to build a vision and get others to buy into it; in fact, it can take time and money - hence why talk is not cheap. On a related note, having a strong leader aligned with the overarching goals to continue to run the business is also critical.
More specifically, this leader needs to be confident and out in front of the other employees and team members, often emphasizing, “yes we can hit these numbers, we can accomplish our goal.” For optimal success, this individual should be identified early on in the process (preferably by due diligence).
While no two integration management offices are the same, there are overriding principles that can be molded to your IMO team’s specific goals (perhaps “slash and burn” or “take everything and make it our best”) to generate a strategy and, in general, foster a culture that will breed success.
In the end, though, experience is perhaps the best teacher so be sure to document everything, which will allow you to remember what you did, what happened and what was ultimately learned from the deal experience so these learnings can be carried forward.