Why acquiring and integrating companies is hard, and what to do about it

A.T. Gimbel
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January 16, 2018

With the recent announcement of Terminus acquiring BrightFunnel, this led me to think about the challenges of integrating acquired companies. Multiple studies have shown that the majority of acquisitions do not meet their financial targets. Having previously led several acquisitions and integration efforts, I personally know how hard integration can be! Here are a few key things I learned (through many mistakes) to help drive a successful integration.

Focus on Key Deal Drivers

First, focus integration on key deal drivers with clear performance goals. It is easy to quickly get lost in all the detailed processes and activities that occur, but ensure focus on the key sources of value (and they vary by deal) and align your time/resources appropriately. Deal value could be from things like a cost reduction, a technology integration, an opportunity to cross-sell, or entering a new market. To keep that focus, make sure to track key metrics that tie back to that deal value and proactively highlight if any adjustments need to be made. Customers are also watching; it is worth reinforcing that deal value to them by communicating the vision and benefits they will see. To that point, be careful to not lose sight of the core business. Use integration as an opportunity to innovate within the core business versus focusing solely on integration as a standalone thing.

Focus on Culture

A common challenge is culture. Whether it is startup companies or large corporate entities, acquisitions can quickly go sideways here. Make clear decisions early on how much you want to keep the entities separate/together and timing (there are pros and cons to each). Diligently prepare for Day 1 by identifying and retaining key talent (often a big reason for an acquisition) as well as ensuring all the “little things” are quickly resolved to avoid employee frustrations. Things like computers, access, benefits, pay, titles, etc. can all quickly blow up if not addressed. Just remember, over-communicate and when you think you are over-communicating, communicate more! In the absence of information, people will assume the worst and this is accelerated if the acquired company is in a different location.

Just Remember, over-communicate!

Focus on the Right Team

To help address culture challenges and hitting key deal drivers, ensure the right team is in place. There should be one clear “leader” of the post-merger integration efforts and they should be almost exclusively focused on this task (especially early on). This is often a good chance to challenge a high-potential employee, allow them to be exposed to a lot of areas, and then transition to a new role when integration slows down. Even with one integration leader, both the acquirer and acquiree companies should have representation. Acquired companies can quickly feel like they have no say if not involved in the decision making process. People often assume culture is represented by norms (and that is partly true), but a big part of culture as it relates to integration is how companies make decisions. Some are consensus driven/unilateral, some are quick/slow, some are data driven/gut feel. It is important to sync how decisions are made.

Focus your Decision Making

Which leads me to my last point; have clear work plans and performance tracking with a central decision making process. There is one central spot where the entire team can go/meet to see the vision, how things are tracking, document what decisions are made, etc. A lot of false information and rumors can arise, and it is critical to have a central place of alignment as well as meeting cadence to get on the same page. This also allows you to celebrate quick wins and build momentum, and ensure accountability from all the functional areas that need to work together.

There are many more complexities of integration, but achieving clear focus, addressing culture, putting the right team in place, and centrally coordinating execution can help go a long way to ensuring your acquisition becomes one of the few to successfully achieve your targets!

This the first post in a series meant to help navigate the struggles of integration. Check out Part 2 and Part 3 too.

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