In the words of Benjamin Franklin, "If you fail to plan, you are planning to fail." This statement often reflects the widely accepted notion that strategic planning is crucial for success. In the process of mergers and acquisitions, it’s important not only to plan for endeavours but also to have a robust framework that can be in place long after the deal is complete.
But how do you prioritise clear communication and shared goals from the outset? The best starting place is to gather senior stakeholders as representatives from both organisations to understand their expectations and concerns. Having the right people together, they need to collaboratively identify synergies and areas where both parties can benefit, ensuring that the deal aligns with the strategic objectives of each while maintaining the day-to-day tasks that need to continue as business as usual.
So, how do you achieve this? It can, at times, be a difficult process that requires a huge amount of patience and work. In this blog, we’ve captured our top 5 non-negotiables for planning.
5 steps to mastering merger and acquisition planning.
Mergers and acquisitions (M&A) are complex and can shape the future of organisations. The success of strategic moves is not just about making the deal but, more importantly, about meticulous planning. Drawing from Karumba Consulting's experiences in technology integration and divestments for large e-commerce travel organisations, we unravel the crucial role of planning in achieving success in the M&A landscape.
Step 1- Clear problem identification and objectives
Imagine a company gearing up for a significant shift – they aren't just facing connectivity hiccups; they are plotting a course to untangle their technology knots during a divestment – you want to be precise, clear, and in sync. Objectives can't be vague notions; they need to be as specific as a map, measurable like the distance between islands, and, most importantly, in unison with the broader business activities. It's not just about where you're going; it's about how your every move contributes to the end goal. In M&A technology, clarity isn't just a luxury; it's your ticket to success and the foundation of your planning.
As a starting point:
Conduct stakeholder workshops: Gather decision makers/leaders, including executives, to understand their perspectives, expectations, and long-term goals for the M&A and outline what the deal breakers and non-negotiables are.
Perform a SWOT analysis: Evaluate the strengths, weaknesses, opportunities, and threats associated with the M&A, aligning them with organisational objectives.
Set SMART objectives: Ensure objectives are specific, measurable, achievable, relevant, and time-bound.
An example of a SMART objective framework based on one of our clients:
By the end of the next fiscal quarter, the client needed to reduce the lead time for office connectivity across 96 global offices by 20% following the successful implementation of a cost-effective client architecture. This objective aimed to enhance agility, streamline processes, and contribute to a 15% reduction in fixed data circuit costs, aligning with broader organisational goals of minimising fixed expenses and facilitating agile business growth.
SMART criteria framework from this example:
Specific: The objective precisely outlines the target – reducing lead time for office connectivity using a cost-effective architecture.
Measurable: Reducing lead time by 20% provides a clear metric for success.
Achievable: Given the adoption of the client's technology, the objective is realistic within the specified timeframe.
Relevant: The objective aligns with the broader organisational goals of minimising fixed expenses and promoting agile business growth.
Time-bound: The timeframe of the next fiscal quarter provides a specific deadline for achieving the objective.
When setting out your framework, make sure your objectives are tangible and measurable.
What key stakeholders need to be included:
Executive leadership: For strategic vision and alignment.
Functional heads: To ensure alignment with departmental goals.
Legal and compliance teams: For understanding regulatory requirements.
Step 2 – Conduct thorough due diligence
Due diligence is like examining a puzzle, where every piece matters. It's about getting acquainted with the ins and outs of the business landscape, uncovering crucial insights, and understanding potential stumbling blocks.
Your goals should be measurable – consider them the steps you take. Most importantly, they should fit with the broader business activities. It's not just about where you're going; it's about ensuring that every move contributes effortlessly to the end goal.
It's your strategic guide, offering clarity –pinpointing risks, and enabling informed decisions.
Where to start:
Assemble due diligence teams: Form cross-functional teams comprising legal, financial, IT, and HR experts.
Conduct legal and regulatory audits: Examine legal standing, compliance, and regulatory obligations.
Financial and IT audits: Evaluate financial health and assess the compatibility of IT systems.
While working with a client facing challenges with over 300 fixed data circuits, the need to conduct extensive due diligence was essential. The cross-functional team, comprising legal, IT, and financial experts, diligently examined the existing technology infrastructure, assessing the strengths and weaknesses of the current fixed data circuits. They delved into the contractual obligations, financial and economic implications, and potential risks of transitioning to a new cost-effective solution based on commodity internet circuits. This comprehensive due diligence involved detailed audits of the existing circuits, vendor contracts, and financial records, ensuring a thorough understanding of the landscape before recommending and implementing the proposed solution. Through this meticulous process uncover potential challenges, assess the feasibility of the transition, and align the solution with the client's overarching business objectives.
The outcome - a successful implementation of a new cost-effective solution, resulting in reduced lead times for office connectivity, streamlined processes, and a significant reduction in fixed data circuit costs for the client.
Legal Counsel: For legal and regulatory due diligence.
Finance Team: For financial audits.
IT Experts: For technology assessments.
Step 3 – Develop a robust communication plan:
Communication plans go beyond transmitting information; it's about strategically managing the narrative, addressing concerns, and ensuring every organisation member is in sync with the overarching goals. A well-executed communication plan in M&A technology is the key to bridging elements, fostering collaboration, and ultimately steering the entire organisation towards a successful transition.
Where to start:
Identify key messages: Determine key messages for different stakeholders, addressing concerns and providing updates.
Establish communication channels: Select appropriate channels for internal and external communications.
Create a communication timeline: Develop a timeline outlining when and how communications will be disseminated.
Recognising the complexity of a project and the need for transparent communication, Karumba Consulting initiated a comprehensive communication plan. The plan involved regular updates to all relevant stakeholders, including internal teams, vendors, and IT personnel across 96 global offices. To address language differences and time zone variations, The need to establish This proactive communication approach provided a clear picture of the project's status, mitigated uncertainties, and ensured everyone involved was on the same page. The result was a well-informed and engaged workforce, contributing to the project's overall success.
Communication specialists: For crafting effective messages.
Leadership team: For endorsement and alignment.
Employee representatives: For addressing workforce concerns.
Step 4 - Establish a risk management framework:
Establishing a risk management framework involves implementing a structured and proactive system to identify, assess, mitigate, and monitor potential risks associated with the integration process. This ensures a more controlled and informed approach to navigating uncertainties and challenges.
Where to start:
Identify potential risks: Conduct risk assessments across legal, financial, technological, and operational dimensions.
Prioritise risks: Evaluate risks based on impact and likelihood, prioritising those with the most significant potential impact.
Develop mitigation strategies: Formulate strategies to mitigate identified risks, including contingency plans.
Example of establishing a risk management framework:
Acknowledging the complexity of the technology transition, you need to establish a robust risk management framework proactively. The process involves identifying potential risks associated with the transition, including technical glitches, coordination issues, and business downtime. You can develop mitigation strategies by prioritising risks based on impact and likelihood. These strategies included conducting thorough testing and piloting of the new architecture, implementing contingency plans for possible disruptions, and ensuring close coordination with vendors and IT teams globally. The risk management framework will help anticipate challenges and allow you to navigate the project successfully, minimising business disruptions and ensuring a smooth transition.
Risk management team: To lead risk assessments.
Legal counsel: For legal risk considerations.
Operational leaders: For identifying operational risks.
Step 5 - Prioritising cultural integration:
This part of the journey can be the most difficult to overcome. Prioritising cultural integration means ensuring that when two companies come together, their ways of working, values, and ways of doing things are blended smoothly. It's like ensuring that everyone speaks the same "work language," understands each other's traditions, and collaborates effectively, creating a unified and harmonious work environment.
Steps to achieve good cultural integration:
Conduct cultural assessments: Assess the cultural landscape of both organisations to identify similarities and differences.
Form cultural integration teams: Assemble teams responsible for addressing cultural nuances.
Implement cultural integration programs: Develop initiatives to foster collaboration, shared values, and mutual understanding.
Example of how to address cultural integration:
Playing a pivotal role in ensuring cultural integration between a client and an acquired company in a merger scenario. The organisations had distinct corporate cultures, so fostering a unified work environment is essential. Cultural integration teams comprised representatives from both entities, who collaboratively identified shared values and differences. One way to help promote positive environments is to facilitate interactive workshops and forums to encourage open discussions about cultural nuances, expectations, and work practices. Tailored initiatives, such as cross-functional team-building activities and mentorship programs, can be implemented to strengthen connections and build a shared identity. This proactive approach facilitates a smooth post-merger transition and cultivates a harmonious workplace culture that promotes collaboration and mutual understanding.
HR and culture experts: For guiding cultural assessments.
Employee representatives: To provide insights into workforce dynamics.
Leadership team: For endorsement and support.
Navigating the finer details of planning involves numerous components that span several months. These five steps are the tip of the iceberg and can provide a starting foundation, but the complexity continues. Balancing these tasks and more alongside the daily operations and objectives of the company poses a growing challenge for senior stakeholders.
Drawing upon our extensive experience in M&A technology, Karumba Consulting has successfully facilitated transitions on a global scale. We're here to provide expertise if you're seeking assistance and support for your M&A journey. Reach out to us for personalised guidance and solutions.