Case studies

Avoiding the crunch in mergers and acquisitions

Phil Richardson of Thoughtcrew talks to Danny Davies from DD Consulting about the mergers and acquisition marketplace. Danny runs DDConsulting and is a trustee for the Chartered Institute of Management. Here are the questions and answers from that session. If you want to ask a question then please use the comments section or you can contact Danny directly at his email at the end of the article.

What is the key issue for a senior manager involved in a merger?

• What is our integration strategy: where are we trying to get to and how will we get there? What level of integration are we after?

• Review customers, process, IT: Understand the differences between companies and enable planning and resourcing of integration, What will we do and when?

• What is our retention strategy: Whom will we need to keep?

• Develop employee communications: What will we tell people when and how?

• Review relationships: What are the important contacts?

• Plan resources: Where will we need additional knowledge or resource? Consider that the drain of resources resulting from the integration may happen earlier than you’ve planned for!

• M&A integration experience and knowledge: What experience, understanding, capability do we have around integration? Have we ever done one like this before? Do we need a sounding board for ideas? Do we need a checklist?

How can M&A experience be used to help departments who are merging?

The key to a successful integration project is planning. This applies for the integration of

departments, functions, groups, units, businesses or companies (M&A). There are many important questions to discuss around people management, culture, HR, IT, customers, productivity, speed, synergies, linking with other departments and generally bringing people together.

Remember: the later in the process you start to think about, plan and act upon these issues,

the longer your people will be concerned about their careers, their future, their

livelihood, their life. During this period of uncertainty company productivity,

levels and ultimately profit can and will “dip”. The key is to ensure you come out of that

“dip”. Some companies don’t…

What would be the top three skills an M&A project manger must posses?

• Integration knowledge and experience. There are activities and reactions that occur each and every time given a certain course of events, people that have not been through M&A will not see these in time.

• Business knowledge – cant just use an IT project manager.

• Project management skills – planning, team selection, business case writing, evaluation and delivery, project tracking

What are the key measures you would recommend to show a merger was on track?

• Traffic light reports, with progress, issues, blockers

o There are numerous projects needed to put 2 or more departments together. These all interlink and are focused upon delivery. Each should be individually tracked and then the overall project manger will have a summary showing all projects, how they are progressing against plans, together with problems that have arisen. The aim of this document is to ensure smooth delivery and enable blocks to be removed.

• Cost and benefit plans together with delivery

o There is a cost involved in integrating departments, this should be tracked

• KPI’s on customer satisfaction, employee satisfaction and department or company profit

What are the key trends in the finance sector from an M&A point of view following the ‘credit crunch’?

• M&A continues across all sectors, at a lower rate than when driven by the private equity in recent times.

• Credit crunch means many companies are holding off on M&A or don’t have the cash to do it…however there are now cheaper companies to buy so many are gearing up for a spending spree

• Corporate profits are down, leading to internal cost pressure and more and more internal restructure (change, efficiency programmes), leading to the integration (or putting together) of departments.

What are the main concerns for the integration manager?

• Will I hit my numbers
• Will sales improve
• Can I cut those costs and not damage the business
• Will people leave
• How can I remove the right people
• How fast should I go, I want to go fast but not too fast
• What process should I use to deliver
• I have so much to do and not enough resource
• How far should I integrate

Danny Davis would be happy to discuss with you how best to take advantage of the opportunities facing your business today.

Danny Davis is Owner of DDConsulting and trustee on the board of the Chartered
Management Institute. He can be contacted at danny.davis@ddavisconsulting.com

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