Acquisition Integration Plan: Prepare for an Acquisition

Acquisition definition

An acquisition often requires as much time to integrate as it does to identify, negotiate and close the deal.

I’m a big advocate of acquisitions as a means of business growth. But it really depends on your industry, background, interests, goals, and strategy. Growth via acquisitions is a strategy, just as pure organic growth is a strategy, growth through partnering is a strategy, and growth through licensing is a strategy. If you do decide to acquire another company either because it’s part of your overall strategy or simply because an opportunity to do so came up that’s so good you can’t pass it up, you must not only know how to make sure it’s a good deal financially for your firm, but you must also ensure that it’s a good deal financially for your firm.

The difference between making sure and ensuring an acquisition is a good deal.

Discussing acquisition integration with the management team.

What’s the difference? The first – making sure it’s a good deal – is doing the front end analysis on the company:  running the numbers, assessing the industry and competition, and confirming the infrastructure behind those numbers. The second – ensuring it’s a good deal – is integrating the acquired company with your company’s management team and employees, culture, infrastructure (operational, financial/accounting, and IT), and strategy. When you don’t begin the integration from the day after the deal closes, you increase the probability that you won’t come close to realizing the financial rewards you expected. How do you go about fully integrating the acquired company? Craft an acquisition integration plan. By going through the process of creating the acquisition integration plan, you and your management team will answer this question yourselves.

Know the keys to a successful acquisition.

According to the Inc. article, Prepping Your Team for An Acquisition, ‘ “Integrating an acquired business is always a challenge, and poor integration is the leading factor for a failed acquisition,” says Neil Shroff, managing director of Orion Capital Group in Menlo Park, California…’

‘The key to successful integration, Shroff says, is getting your management team involved in planning properly for what happens after the deal is closed. In other words, buyers tend to get stuck thinking about how to close the deal rather than thinking ahead in terms of how they plan to integrate their new acquisition so that it can deliver on all the spreadsheet promises.

Create an acquisition integration plan.

This acquisition integration plan is in addition to and separate from your regular business plan. The business plan will discuss your acquisition strategy and may even mention targets but it is not the place to go into detail on what happens after you make the acquisition. The acquisition integration plan is like a business operational plan. It covers the how.  This acquisition integration plan will include the following components:  an ongoing employee communication plan {including when and how to notify staff (incoming and existing) regarding the acquisition}, an analysis of hardware and software and the associated IT support,  methodology for handling redundant positions, customer notifications and communication, and supplier / vendor notices, among others.

The earlier you as the CEO or business owner involve the entire management team in the process of integrating the acquired company, the better. The CFO will already be heavily involved as he or she often drives the merger and acquisition processes. An acquisition is not solely a financial deal yet too many companies treat it as such. Acquisitions are a STRATEGY to grow your company. The same work – process development, employee involvement, etc. – you would put in to build your company organically, is still the same work you must put in to build your company through acquisitions.

Include employees in the process.

Finally, as I’ve stated repeatedly, people like to feel they are a part of the process. When they do, they embrace change and its outcomes. When they do not feel they are a part of the process, they offer up a lot of resistance. Think about yourself. Don’t you do the same thing? When you create an acquisition integration plan and involve your management team and others in the process early on and communicate with your employees as soon as you are confident the acquisition will be completed, you drastically decrease employees’ stress level and you pave the way to an acquisition that delivers the growth and improved financials you expected.