Post deal integration - Looking beyond the here and now

appeared in the JEP Investment Review, June 2016

David O'Brien, Senior Manager in the Advisory Team at PwC CI

Many leading players in the Channel Islands choose to grow by acquisition or merger to more quickly access new clients, sectors and geographic markets. We see a real challenge in how they choose to integrate, manage and run their new combined business from the outset. Notably, it’s not easy.

It’s commonly recognised that finding and executing the right deal requires considerable effort at senior management level, yet devising and implementing the integration plan can be even more challenging; and one that is often overlooked when two companies are coming together. It’s therefore important that the newly combined business has a clear vision from the outset as to how the integration will be delivered; understanding the underlying drivers is key. Add on the fact that many businesses struggle with their existing projects (39% failing due to lack of planning and resources 1), the need for a dedicated Project Management team is as integral to success. Whilst we recognise that no business combination is alike, we have set out some of the common principles and considerations that can really help maximise deal value.

Define the integration strategy early

Aligning your acquisition strategy into an integration strategy quickly is essential. This includes being clear on your choices, trade-offs and non-negotiables as part of the combination. This then enables you to consider the implications associated with your investment decisions. For example, IT aspects are often left as a last thought, however with the growth of interconnectivity and varied technology companies, you need to ensure an early focus on technical architecture, especially given the rapidly evolving digital and Fintech opportunities.

Keep Control

As with any large, complex project, it’s vital that there are clear, defined project management and governance structures in place. Without these you could see the integration failing from the start, which could ultimately impact your continuity of customer service and, as a result, see you losing clients and market share rather than generating the desired increase. You should look to drive the integration according to your business plan and priorities, rather than a generic plan. Look to consider and define your key target dates and what you expect to achieve at each one. The setup of clear delivery and reporting structures, good project discipline and adherence to key milestones will ensure momentum is maintained and project fatigue is actively managed.

Focus on priority value initiatives

Rather than looking at the integration as an all-consuming project; breaking it down by work stream, identifying your quick wins while prioritising value initiatives by financial impact and probability of success will make the project less daunting. It’s also an opportunity to celebrate success after all!

Too often, key management figures are pulled unnecessarily into the integration which impacts their ability to focus on the existing business. Remember that despite the deal taking place, there’s still a requirement to focus on business as usual; therefore, having the high value integration activities prioritised and responsibilities clearly defined will help drive this focus.