Mastering M&A Integration

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A lot of times, M&A integration is considered only after closing the deal. It is often treated as an afterthought, and this approach is where many deal failures stem from.

If we want to improve our M&A process and get better results from deals, we have to start updating our practices to the most efficient way of doing things. In this article, Seema Nimmagadda, Head of M&A Integration for North America at Woven by Toyota, discusses how to master M&A integration.?

"The level of detail you need to include when you build your integration strategy should be enough for you to actually take the next step to build the plan, which you can execute." – Seema Nimmagadda

Listen to the episode below or click here to get the transcript and listen to your favorite player.

Build integration expertise

The majority of companies do not have a dedicated IMO for their acquisitions. And one of the biggest challenges of M&A integration is the limited resources and capabilities of the functional leads due to their day jobs. According to Seema, the best thing to do is to use downtime effectively.?

When there are no active deals or the deal pipeline is inactive, use this time to build capabilities and identify resources in functions like HR, finance, legal, etc. Conduct workshops, train resources, and utilize any developed playbooks to bring everyone up to speed.

Learn from past acquisitions to pinpoint areas needing focus. While expertise may exist in certain areas, for instance, IT might require more capability building. Identify these gaps or focus areas for your organization and start developing expertise. This ensures when the next deal arrives, the right resources and capabilities are in place to manage it effectively.

Key integration milestones

To increase chances of success during M&A integration, we have to bring in the integration as early as possible in the deal lifecycle. When structuring the deal and building the deal strategy, that's the right time to bring in integration and start building the integration strategy in parallel. It is also ideal to have the integration management office lead the overall due diligence process to help ensure the team has the right integration plan and strategy. Here are some integration milestones to aim for:

1. Establish an early IMO

Form the early version of the IMO before signing the LOI. During this phase, acquirers don't have to bring in all the functions and work streams into the mix, but they can bring in the key leads depending on the type of the deal.

2. Develop Integration Strategy

The integration strategy must be tightly aligned with the overall objectives of the deal.?

3. Build an integration plan

This involves creating a high-level, adaptable roadmap for integration, ensuring that the strategy is flexible and responsive to evolving needs.

4. Socializing the integration strategy and plan

The most important milestone is to socialize the integration strategy and plan with the key stakeholders, including the deal sponsor and all the functional executives. Because this is pre-close, there’s not much visibility. Use the 'two-in-the-box' approach and get commitment from the target side.?

Managing Cross-Functional Dependencies

Maintaining collaboration throughout the entire process is key to a successful M&A integration. The integration management office must simplify the overall integration process for all the workstream leads and try to minimize the overhead of integration as much as possible.

When it comes to templates, use tools that the team is already familiar with. Don’t introduce a new tool for the integration and then require updates on a regular or weekly basis. Workstream leads often raise concerns about not having the time to learn something new. Being flexible to whatever tool or format works for the team is key to minimize the overhead on all the functional leads.

Lastly, bring everyone together in a regular manner. Weekly or bi-weekly meetings help align and address any issues quickly. Having those checkpoints is crucial to ensure the project is on track and the team is able to make any necessary adjustments.

Listen to the episode below or click here to get the transcript and listen to your favorite player.