Integration Strategies in M&A Part 1

In the complex world of M&A, the difference between a successful deal and a failed one often hinges on integration. Proper integration, driven by a harmonious fusion of strategy and execution, ensures that the merging entities can effectively combine their strengths and navigate potential pitfalls. In this article, we dive deep into the heart of integration strategies and underscore the pivotal role of the integration team during the due diligence process, featuring Chris Evans, ex-Head of CorpDev Integration at Amazon, and Scott Boyd, former Head of Integration for AWS.

“Integration leaders are very much promise keepers, not just promise makers. So having those promise keepers in the room early on is essential” - Scott Boyd

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Integration Strategy

Business strategies dictate the integration strategy. Integration can range from fully combining two companies to letting them operate separately. There's no one perfect way to integrate businesses. Instead of a one-size-fits-all approach, it's more like a toolbox, with different methods for different situations. 

The best thing an integration function can do is to remain flexible while being robust in its practices and documentation. It's all about having a clear plan from the start and deciding what to combine and what to keep separate while making the most of the acquisition.

Integration-led Due Diligence Process 

“When you’re (integration lead) running the due diligence, your role is active because you’re responsible for it. And when you deeply understand the business then you make better integration decisions.” - Chris Evans

Involving the integration lead pre-LOI is highly beneficial as they understand the business more than the deal team. To take it even further, Scott and Chris have allowed the integration lead to run the diligence process. According to them, putting the integration team at the forefront of due diligence offers multiple benefits:

‍1. Building Relationships: Direct engagement with company leaders fosters relationships between the integration team and the target company. Building trust early during the due diligence process ensures easier changes later. 

2. Speeds up the Process: The integration team leading due diligence reduces the repetition of questions and will help facilitate a smoother due diligence process. 

3. Better Decision Making:  Integration teams understand the DNA of their own company. They can assess how the target company’s processes, technology, and culture will align with or diverge from the acquiring company and will lead to better decision-making during execution. 

Understanding Culture 

Culture is one of the most important things to focus on during diligence. Integration teams engage with the business sponsor because they are the best judge of how the newly acquired target will fit into the organization. The sponsor should be confident about a positive path forward with the target company. 

Aside from culture, another significant aspect to consider is the expected changes to the target company's operating model. It's essential to understand the extent of changes to the operating model early on and to ensure that the organization and its executive team can navigate those changes. It's not just about doing the right thing but also about what to avoid.

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