Four Key Tips to Ensure a Smooth M&A Integration Process 


M&A best practices to follow and questions to ask to ensure a smooth and seamless transition and successful integration.

As the country faces a recession and interest rates have climbed to the highest rate in 30 years, some business leaders may shy away from mergers and acquisitions (M&A). But actually, instead of hitting pause when the economy slows down, companies should double down. It is more important than ever for businesses to approach M&As with a solid plan in place. 

To get that plan in place, try to get ahead of surprises. I have found that the biggest challenge with M&As is that no matter how prepared you think you are in understanding the finances of a deal, you may be surprised when you start to dig into the operations of a company — and you may not be ready to handle the surprises. There’s a lot that comes with learning about a new company and preparing to integrate its operations into yours. This can include how the new company captures leads, how the team handles billing and invoicing collection processes, and how the team manages licenses or subscriptions within respective tools. Or, it can be on the softer side of the spectrum: culture, executive personalities, and values. When you are surprised, it prolongs the time it takes to capture the value of the integration because you have to spend more time unpacking the respective company versus spending that time integrating it into your company.

So that said, allow me to share four best practices to follow when going through a merger or acquisition and questions you should ask so you can ensure a smooth and seamless transition. 

See also: Bespoke or Templated: The Impact of Integration Styles

Understand the maturity cycle 

Through the research process, it’s important to look at the maturity of where the company that you’re looking to procure and the maturity of your ability to integrate. Your team must align on your criteria for acquiring a business internally so that you’re only looking and exploring opportunities that you believe fit your ability to integrate as well as the company’s maturity. To address this, understanding motives for M&As are important: Are you looking to increase economies of scale, increase market share, add new products or service capabilities, expand geographically, or is there a financial motivation?

Understanding the maturity of both companies before you begin the buying process will ensure that you will be more aligned with your goals for the M&A. 

Once you’ve acquired a company, I believe there is a ladder of success for the M&A integration maturity cycle. In phase one, you should focus on acquisition data and content. This includes migrations and consolidation and focusing on the integration into existing portfolio companies. Phase two is all about the acquisition workflow and process. Teams will be prioritizing synchronizations and aggregation analysis. This will include improving system integrations, enabling data insights, and connecting to other systems in the IT environment. Finally, the third phase is about user experiences, which covers automations and optimizations. In this phase, companies will focus on optimizing the acquisition’s ecosystem, which will include simplifying integration architecture, consolidating application programming interfaces (APIs), and automating tasks. Each of these phases are key to success for M&A integration and can help companies create a plan for how they complete this process. 

Conduct a deep dive on the company 

When you’re looking at procuring, acquiring, or merging with another company, make sure to understand the business in a fair amount of depth outside of the financials. You want to understand any gaps in capabilities, so you can tailor your integration plan accordingly.

From an operational perspective, look at how they go to market, what systems platforms tools they use, and how they leverage those respective tools in their go-to-market motion. Further, review how they manage their lead to cash applications all the way through and service customers. So, if there are issues, you can understand them, leading to a higher success rate with integrating that company into your respective business. Coupled with this, you need to have a clear understanding of what your respective lead to cash and assurance processes are and be able to identify where you can potentially run into challenges when you’re merging two companies together.

Then once you close the deal, this due diligence will ensure you have access to the right individuals to further validate and ask questions about the business. This will drive your perspective where you have an initial hypothesis on your roadmap, how you want to integrate the back office, and how you want to integrate certain systems, processes, and tools.

Focus on the culture 

It’s important to understand your cultural differences as separate companies and recognize them. If you can’t integrate the culture, your success rate on capturing your deal hypothesis, or the value from it, goes down dramatically. While it’s been challenging with COVID-19, one way to get acquainted with the culture of the company is to visit with the respective teams in person. When you visit, make sure you are transparent with what you’re trying to accomplish and why the M&A makes sense to the extent that you can. Ensure that your teams are aligned and really understand how they work every day. 

The leadership teams should spend time with various employees and ask questions, such as: What do you do? How do you do your job? How do you operate? How can we collaborate to make this joint company even better? How can we merge while still ensuring that we drive scale? How do we get the joint company set up so that the next one can also be integrated into the same vision and tech stack? Through that process, there are some things that you can learn and apply back into the business. 

These in-depth discussions with the teams will help you shape your integration strategy. The key is to take some positive traits from the company in which you’re acquiring because they’re successful for a reason, and you don’t want to lose that in the M&A integration. Communication is also critical. When communicating the acquisition to employees, paint the future of what the joint companies will look like. This will help ensure that employees understand the impacts and how their roles might change with the acquisition.

Align on processes and tech tools 

When you are going through a merger or acquisition, you are focused on aligning on a single set of platforms or tools. There will be a prolonged cost model associated with that respective company. Additionally, there will be systems and processes that the company has been using that are going to continue to live in perpetuity if you can’t get them migrated. The longer that a company goes using an old process and not in an agreed-upon way, the harder it will be to unpack over time.

For example, if you have five different companies using five old processes and try to then use an integration software to migrate into one enterprise resource planning (ERP) so you can report correctly, it will prove challenging. Having a group of people manage five different ERP processes will be an administrative roadblock. There will be issues with aligning reporting and processes, and all the data will be different. By taking time to integrate into one system instead of five, there will be more streamlined workflows and more holistic views across those companies.

However, this integration process can be time-consuming. Using low-code application development tools can be helpful with speeding up the integration. By using these tools, you can quickly integrate ERP whilst you’re trying to configure the customer relationship management (CRM). You can then build applications on certain data elements that you want to extract from the company’s systems so that you start to get control of the data without a full migration plan and using one set of systems. It provides you with time to develop a comprehensive plan that enables you to get into your defined operating processes or your desired end state.

Along with those best practices, it’s also important to ask your team specific questions along the way as you develop your integration strategy. 

Questions to ask as you prepare your M&A integration strategy

  1. What is your integration approach, and is there broad alignment on your integration strategy and priorities?
  2. Do you have dedicated and skilled integration resources in the organization? Or do the current teams have the bandwidth to work on integration-related projects while continuing to perform their day-to-day responsibilities?
  3. Do you have system integration tools in place, and can they be leveraged to support your migration strategy?
  4. What is your process and/or cadence for reviewing integration milestones, and who needs to attend and assist with specific decisions, risks, or issues that arise?
  5. What is your communication plan for keeping all employees and stakeholders informed about integration progress, upcoming activities, and changes to business processes as a result of an integration?

Take thoughtful steps toward M&A today

The key is to not be scared of M&A. Don’t be scared to acquire and don’t be scared to be acquired, as they can add significant value to the business. There are several benefits to M&A that can help your company leap forward in your respective industry. If you pay attention to your culture and use the right diligence and sound integration approach, M&As can be extremely lucrative to your business from a valuation perspective.

Jeremy Parker

About Jeremy Parker

Jeremy Parker is chief operating officer at Jitterbit.

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