Ending the Integration Process
As the different teams involved in the integration effort work their way through their backlogs, uncertainty decreases. Keeping the charter and functional checklists aligned with the goals of the initiative becomes simpler, as does managing dependencies, and coordinating the project becomes less complex overall. Successfully closing the project within the charter parameters looks increasingly probable.
The integration process does not conclude all at once. Integration ends in the same manner in which it began, with teams gradually closing out their backlogs and exiting the project in a staggered fashion. Only the deal team remains by the very end of the deal. When the deal team finds that all of the end state requirements of the project have been met, the deal lead requests approval from the sponsor of the M&A initiative — generally the CEO or board — to formally close the project. Upon receiving this approval, the deal lead holds its own project retrospective to analyze the process and lay the foundation for future improvements.
Formal Binder Close
If the integration project successfully realizes its True North goals, the ending stages of the M&A lifecycle can be a relatively relaxed affair, focusing on potential process and alignment improvements.
In the event that the integration project failed to meet its objectives, this closing period becomes much more hectic and critical. The integration team must take this as a chance to reflect on what went wrong and to come up with potential solutions for future projects. In the unlikely event that the project failed due to incompetence or mismanagement on the side of the integration team, this reflection is largely an internal process. Most integrations fail, however, for reasons beyond the integration team’s control.
If the gap between corp dev and integration was not effectively bridged, the integration team may have been handed a fundamentally unworkable asset, or have been expected to meet unrealistic True North goals. Even in cases in which the entire initiative was completed according to best practices — with a dedicated deal team involved from the beginning, a perfectly executed due diligence, and a realistic set of expectations — unforeseen variables could cause the asset to fail to realize its expected potential, or even precipitate a catastrophic failure resulting in the early termination of the integration effort.
Regarding failure, there are three important facts to keep in mind about M&A:
- Most M&A initiatives fail during integration.
- This failure typically has nothing to do with the integration team.
- The integration team is usually blamed for failure anyway.
To make matters worse, when an integration effort succeeds, the integration team’s accomplishments usually go unnoticed or unappreciated. By the time the deal is closed, corp dev and the sellers of the acquired business have already celebrated the success of the M&A initiative. If the deal fails post-close, the integration team makes for an easy target. For the integration team, it is a lose-lose situation, and many integration specialists harbor a degree of resentment towards corp dev teams and executives.
An Agile M&A approach neutralizes this disjoint between integration and corp dev from the beginning of the project, by making the case for a true partnership between the two teams — or, ideally, for integration and corp dev to act as a unified team. When both own the process and are tied to long-term outcomes, there is little reason to place blame.
A retrospective to mark the formal close of the M&A project allows for issues that arose during the deal to be considered in a productive way. By presenting a meaningful analysis of precisely what went wrong with the deal, the deal team can clear their name and start a conversation about aligning the two phases of the M&A lifecycle. The post-close retrospective captures lessons learned and generates ideas for improving the process in future iterations.
Once the formal closing process is complete, the deal team officially disbands, and the M&A lifecycle is complete.
Tips and Strategies:
There is a well-established inverse relationship between the amount of time an integration takes and the likelihood that it will succeed. Accordingly, it is critical to ensure that integration happens according to a clearly defined schedule. The initial momentum following an acquisition can help to propel a team rapidly through a well-mapped integration strategy. Around 100-120 days into the process, however, that momentum dwindles, and issues of fatigue and low team morale set in. It is critical to try to hit key goals within this timeframe; some projects, however, will inevitably take longer. A single block or bottleneck can jeopardize the momentum of your integration — a series of complications can destroy value creation entirely.
To avoid becoming bogged down, it is imperative that teams make every conceivable effort to eliminate unnecessary or repetitive work, communication lags, or other avoidable slowdowns and blockages. This will help to ensure that the complex process of integrating a new asset into the structure of the acquiring company has every possible chance to succeed.