Business Advisory: The critical role of early planning in M&A integration success

Over the last decade, I’ve worked on a number of Australasia’s largest M&A deals, helping organisations either integrate or separate their acquired or divested businesses. These deals often hit the front page of the AFR on announcement, however, despite the size of these transactions the teams’ responsible for integrating or separating the businesses are brought in too late or, in some cases, have not been mobilised at the time of announcement. This often results in M&A transition teams playing a game of constant catch-up to deliver against pre-agreed synergy targets, milestones and timelines that don’t necessarily drive the best possible experience for people, customers, partners, and shareholders.

As I reflect on my experience in M&A transitions, I have defined several areas in which practitioners should focus their efforts. Over the next few months I will be sharing these focus areas with suggested tips that I believe acquisitive organisations (including organisations going through major transformation) should consider when executing M&A, particularly if they want to maximise return on investment and realise full synergy value post-integration.

Focus area #1: Think about your integration strategy during due diligence

It is critical to start thinking about your integration strategy as soon as possible, ideally during due diligence. This should begin to shape the level of integration required to unlock expected (or promised) synergies. It will ensure your estimated integration costs, efforts and timeframes are realistic, to manage expectations of your teams, internal and external stakeholders.

The key output from your integration strategy should be a clear Target Operating Model…

• What is the strategic vision and purpose of the combined business?
• How do you drive the best customer experience?
• What are the capabilities needed to deliver these?
• How do you retain talent, drive the right culture and behaviour to maximise joint success?
• How do you integrate both businesses, whilst maintaining momentum in the underlying business(es)?

Key takeaway

Your integration strategy and target operating model serve as a blueprint that all teams should work towards. Subsequent plans should focus on unlocking expected synergies throughout integration while minimising disruption in both your existing business and the incoming business.

Consider these tips for your next acquisition;

1. Bring the integration team into the M&A journey early – nothing beats early collaboration, insight, and differing perspectives. The integration team may also share some of the unintended impacts on business operations to consider mitigating throughout the transaction.
2. Co-design your integration strategy and Target Operating Model – no one will know the target business, operations and people better than the incoming leadership team. Leverage their insights and get buy-in on how both businesses will combine to get the best out of the deal.
3. Develop PMO reporting that tracks integration effectiveness – monitor integration efforts using measurable KPIs and track against the desired strategy, ensuring you’re heading in the right direction, or managing risks and issues to realise intended synergies or re-baseline projected benefits alongside your business sponsor and executive team.

Download our 'Framework for Defining Your Target Operating Model' to start unlocking the full potential of your transactions and achieve better M&A outcomes.

DLA Piper Business Advisory

For the last 14 years, DLA Piper has been ranked number one by global M&A deal count and the Business Advisory team brings specialist experience across the M&A lifecycle. With experience in deal strategy, execution and integration they are experts in navigating complex challenges to maximise value realisation.