CFO Acquisition Integration Strategies

No pressure, right?

On Wednesday, December 18th, 2013, The CFO RoundTable Boston presented “A CFO’s Guide to Post M&A Integration: Art, Science and the Will to Lead,” where our panel of CFOs and integration experts shared their advice, lessons learned and best practices on how to maintain value and ensure a smooth transition when integrating an acquired company.

Our speakers included:

Ben Howe, CEO, America's Growth Capital Liz Rae Ed Goldfinger, CFO, Veracode Jackie Hamilton Larry Rowland
 Ben Howe
CEO,
America’s
Growth Capital 

Moderator
 Elizabeth B. Rae
Corporate VP,
Human
Resources,
Waters
 Ed Goldfinger
CFO
Veracode
 Jackie Barry
Hamilton, CFO,
Intronis
 Larry
Rowland

Vice President,
Acquisition
Integration,
Nuance

 

What Did We Learn?

Planning for An Integration Should Start Before You Sign The Deal

Integration planning starts first at the team you select to help shepherd your acquisition through its first 30/60/90 days in your company. Our panelists advised that no matter the size of your company, or the company you’re planning to acquire, key executives from cross-functional disciplines should be involved to ensure that all facets of the integration are covered. For example, your CIO, head of HR, head of sales and even heads of your customer support teams should be at the table.

Of course, a project manager should be nominated to lead the integration through its first 90 days with the company. Interestingly, the panel recommended that a Controller or other senior representative from your finance team should be considered as a leader. After all, this is a person who works directly and both a strategic and tactical level with all business units, and will be able to keep tabs on the success of the integration.

It’s also imperative to integration success that the business rules as usual during the integration process. As your integration team will be primarily focused on bringing the acquisition under your roof, be sure to consider whether your integration team will need additional support to help complete their ‘day to day’ business responsibilities.

Most importantly, a successful integration is marked by clear and transparent communication across all levels of both companies. One panelist stated that if you cannot clearly articulate to everyone what you’re buying, why you’re buying it and how it will positively impact the future of your company, then it’s probably best to walk away from the deal table and start over. Secondly, your vision and strategy for the integration must be clearly understood and internalized by both parties, before the deal is signed. One way to accomplish this is to get all of the key executives from both companies into one room, at the same time, and walk them step-by-step through your integration plan before the deal is closed. This way, surprises in the first 90 days can be minimized, enabling a smoother integration process for all.

Hang In There: The First 90 Days Are The Toughest

Acquisitions aren’t just stressful for the integration and executive teams – it’s a ripple effect that’s felt across employees, customers, partners and even shareholders. The panel acknowledged that the first 90 days are the hardest in any integration, but, if your communication with employees on both sides of the fence is authentic, transparent and frequent, your integration efforts can succeed.

First, in the matter of determining headcount from the incoming company, the panel advised to avoid saying “we’ll keep you all.”  Rather, try your best to have a plan beforehand of what roles you’re planning to keep, or transition out of the company.

Secondly, understand that acquisitions cause an inordinate amount of stress on employees, many of whom are worried that they might not have jobs after the integration. Great communication skills come into play at this point – as people often fill in silent spaces with myths, creating a tremendous amount of confusion, and competitors are often swooping in to pluck up your talent, the panel advised to communicate clearly and frequently with all employees as to their future with the company. Assure those that have future roles that they do have a place with the organization, and for those whom you’re not sure about, let them know that their path is unclear, and keep them updated regularly on your progress. For those whom you’re letting go, the panel advised to make cuts all at once, which simply makes the break easier for everyone.

Finally, don’t forget the importance of communicating early and often with your own employees. One panelist recounted an acquisition she was a part of where the employees referred to her team as ‘you people.’ Unbeknownst to them, the company who acquired them had just had a bad earnings report, and its affects were being felt by their employees. The employees, who felt that the company was mismanaging its finances, felt cheated and resentful toward the company they acquired. This situation, which took months to clear up, could have been avoided through direct, authentic and transparent communication from the leadership team to its own employees.

Sometimes Expectations Must Be Reset

As we all know, the truth of operations often rears its head after the deal is signed.

The panel agreed that there will always be customer flight, and often, revenue will take a quick hit before it moves forward. To help ease this turbulence, the panel recommended to reset sales forecasts by 20% – after all, you will have sales reps who will leave and take customers with them, your competitors are going after your clients, and frankly, the existing customers just might not like your brand.

Yet sometimes, it’s not just about the acquisition – it’s about the details shared (or not shared) that can affect your expectations. For example, one panelist shared a story about sales teams who weren’t meeting their new goals, which were thought to have been carried over from the acquired company. After some digging, it was found that the acquired sales and operations teams were never involved in the transaction or the data share, and the sales goals numbers were not realistic.

The panel further cautioned against making too many changes to product lines too soon after the acquisition, as inherited customers may not follow you. As one panelist stated, “Don’t walk away from revenue by shutting down divisions or product lines too soon. Figure out a way to keep the revenue stream, or even manage it separately, and then find a way to work it into your existing product strategy.”

Synergies Happen Functionally

The ultimate dilemma of an acquisition is deciding whether to break down the corporate walls and integrate the teams and product lines into your own, or, keep the company autonomous and successful. As each acquisition is unique, there’s no right or wrong answer here. Rather, the panel advised that the best first step in capitalizing on synergies is to identify and plan for them before the deal is closed. Further, communicate your plan to maximize these synergies before the integration kicks off with your employees and customers to ensure that everyone understands your vision and goals.

Talk Back

Have another question about acquisition integration that our panelists didn’t answer? Want to share your story of integration successes or challenges? Share with us in the comments today!

Photos and More Information

For more information on this or any of the upcoming events The CFO RoundTable has planned, please click here.

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