Ensure a smooth transition on your next deal.
According to CBS MoneyWatch, between 50 and 85 percent of all mergers may not be successful, depending on the research you want to consider.
“People sometimes focus so much on getting the deal done—doing diligence and getting the deal signed and across the table—that they don’t spend as much time planning the integration,” says Glatfelter’s Vice President of Corporate Development and Strategy Sam Hillard. “That’s where the real value is created.”
Hillard notes three common reasons that mergers and acquisitions may stumble and suggests ways to keep your financial boon from becoming a financial bust:
1. Lack of planning and communication.
A sound integration strategy is essential. Too often, potential concerns found in the due diligence phase are not raised up the management chain where they can be dealt with early on. “Silence is not your friend in terms of integration and due diligence,” says Hillard.
2. Company cultures clash.
Sometimes it’s easier to focus on numbers, deadlines, and checklists rather than paying attention to the soft issues surrounding people and company culture that can be just as likely to sink a deal.
3. The target company is not a strategic fit.
“When you go two and three steps removed from what you’re doing today, that’s (whether there’s a ‘fit’ for your organization) where it can get really tricky,” says Hillard. You should be able to create some incremental value right out of the gate.
To get the desired synergies from your next M&A, Hillard recommends leaning on trusted advisers for financial and legal counsel. Then, put together a sound integration plan that includes a dedicated team, a process for correcting issues that arise, and a wrap-up session to review what worked and what didn’t. Your next deal will be stronger for it.