Add-on acquisitions: How to nail the integration phase - Monterro.com

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Add-on acquisitions: How to nail the integration phase

In our Mergers and Acquisitions eBook, we drilled out into the numerous ways that add-on acquisitions can help your business grow. 

For example, by helping you: build a stronger market position and increase company size, expand into new geographies, access new and attractive customer bases, and strengthen your product offer.  

But if you fail to nail the integration phase, the chances of you realising any of those goals is unlikely. 

That’s because, if the two businesses in question can’t work together effectively, the acquisition will fail. And ensuring two companies can work together in this way takes time, patience, care, and a lot of planning.

With this in mind, we’ve pulled together our experts’ top tips to make your integration process a deal maker not a deal breaker.

This is a valuable 4-minute read but if you only have one minute, you can jump to the key takeaways.

Let’s dive in. 

 

Plan integration early

Businesses often fall at this hurdle because they see integration as separate to the deal. But before your offer even goes out, you need an agreed-upon plan for integration already in place. 

That’s because all parties should enter the deal with a clear idea of how the integration will work as it could impact the deal they are prepared to strike. 

Details to hammer out before you sign the deal include: timelines, personnel/staffing/leadership changes, product prioritisation, and the type integration you are aiming for. 

Know your type

There are different types of integration best suited for different situations. 

For example, there are ‘hard integrations’ in which you merge the two businesses immediately. Such integrations work especially well for smaller acquisitions in an area close to your core offering. 

But hard integrations are much more risky when you’re embarking on a large acquisition in a completely new area. For this a ‘soft integration’, in which the two businesses are brought closer together slowly, can work much better. 

“It’s important to understand that the type of integration is dictated by the kind of acquisition you are making, you can’t force an integration style to work regardless of the situation.”

David Kuritzén, Transactions Director – Monterro

Prioritise culture

Assuming you can make a deal work with any business, will cause you big headaches. 

Acquisitions require the two businesses to work closely together and involve a lot of emotions. If there’s a culture clash between the two companies, your acquisition can quickly become a battle. 

To avoid this, start by taking time to work out what your values are. Discuss them at length with your leadership team, so you can clearly communicate them to the other business when approaching a deal. It’s vital you then take time to understand their values and culture. This is the only way you can assess if they’re a good fit or not and how easily you’ll be able to work together. 

Adapt to the pace of change

Every acquisition has a natural pace, as will each phase of that acquisition process. It’s crucial that your timeline has the flexibility to adapt as this natural cadence emerges. 

To successfully manage the pace across the process, check-in with relevant teams to check the temperature – and do it regularly. You need to know: how people feel, how much they can cope with, whether they need more time to come to terms with the sale or if you can push ahead.

Pro tip:

When drawing up your timelines, factor in time for the acquired business to get used to the idea of selling, and a ‘grieving process’ afterwards.

There’s a reason why people refer to businesses as their “baby”. Including time for emotions to take their course in your original timeline will help keep your acquisition on track.  

 

Key takeaways

And that’s it.

  • Be early: Bake your integration plan into the deal, don’t try and tack it on afterwards.
  • Get specific: Know the type of integration you need for the situation you’re in.
  • Respect the culture: Understand that a good culture fit can be make or break, and take time to find a good match.
  • Regulate the timeline: Draw up a timeline which includes some flex and perform regular temperature checks to help you find the natural pace of the acquisition. 

 

If you want the full story on add-on acquisitions, check out our Mergers and Acquisitions eBook

It’s full of top tips and lessons our experts learned (sometimes the hard way). These include: what to put in an acquisition strategy document, the best ways to set expectations and avoid nasty surprises, and the perils of acquiring a competitor.