Successful acquisitions and mergers require strong leadership and a clear voice to guide both the acquirers and the acquirees through the integration process. There are multiple schools of thought to implementing cultural and operational transformations. At Business Review Canada, we spoke with three leading merger and acquisition
specialists to lay out some important dos and do nots.
Doug Cruikshank is the founder and president of The Cruikshank Advisory Group LTD. Cruikshank has personally completed over 125 transactions throughout Western Canada. He founded and is past president of the Association for Corporate Growth–Vancouver.
“One of the deals I was involved with quite awhile ago was an accounting firm. A large, old firm was looking to get into the midmarket, and targeted a leading midmarket firm in the area. It looked like a great acquisition because the company could learn the midmarket and work off of it,” says Cruikshank.
“Conceptually, the deal made a lot of sense. Implementing—the guys who decided to do the deal were not the guys who took over the business. Immediately, they got rid of all small clients and increased rates by 60 percent. Within a year, over half the clients were gone and 80 per cent of the employees were gone. In hindsight, they wasted their money on that acquisition
. They kept all the big deal policies and threw away the midmarket attributes.”
Cruikshank knows the flip side, too.
“I did a brewery deal. I sold a small microbrewery to a large, national brewing company. The buyer had done six to ten acquisitions. They knew ten per cent of the clients would leave as soon as the deal was announced. They built that into their model. They absorbed the operations into the existing facilities. In the case of beer, it was simple. The beers aren’t going to get mad at each other like a couple of accountants could. They walked through all aspects and determined easy placement. The brands still exist today.”
Cruikshank allows that product integration tends to be easier than service mergers.
Lorraine Rieger McGregor is the founder and CEO Spirit West Management Inc. McGregor has worked with more than 100 organizations on integration planning and preparation. She is the current president of the Association for Corporate Growth—Vancouver.
“One of the most difficult transitions in an acquisition is when one competitor has bought another. They have been foes for many years, and if the acquiring
company comes in like the conquering hero they are basically going to kill off the goodwill, the opportunities and what makes that acquired
company great,” says Rieger McGregor.
“That’s a very quick way to alienate people, to erode relationship, to stop the flow of creativity and not gain the opportunities originally wanted. Conglomerates don’t understand small business is relationship-driven. In the big company, it’s systematic-driven.”
Rieger McGregor co-developed the Smart Team toolbox to help change how people think, lead and manage.
“The Smart Team toolbox was built to help companies understand that change starts with the individual. If I’m going to make changes in my organisation, I need to change my thinking to change my behavior to change the organisation,” says Rieger McGregor.
“In the merger process, we like to bring the leaders together and help them understand what collaboration looks like. Collaboration is about, ‘what works for you; what are your interests? How can we find a mutually beneficial way to work together?’ The Smart Team toolbox is all about how to collaborate with yourself, other people and how you talk with each other.”
Rieger McGregor starts with a merger’s human elements to facilitate the operational infusion.
Stéphane Le Bouyonnec is the co-founder and president of Synergis Capital/Global M&A Canada in Montreal. Le Bouyonnec possesses a strong background in corporate strategic planning, mergers and acquisitions activities and financing initiatives.
“It is very important for a board of directors to know what the next steps are after acquisition
. ‘Are the synergies going to be on the revenue side or are we going to reduce expenses?’ What has to happen has to happen fast,” says Le Bouyonnec.
Le Bouyonnec places a premium on rapidly introducing and executing a resolute plan. By doing so, uncertainty and wasteful steps can be avoided.
“If you enter a company and then figure out the plan, it means the work was not well done from the beginning. When doing due diligence, at that moment you know if there are any operational problems like the computer system obsolete or what needs to be changed. [Before the acquisition] is the best time to put together the plan. That’s how you extract more value out of the transaction after closing. You have to tackle all the items of the plan to intercept all underlying values.”
Regardless of the numbers, regardless of the industry, regardless of people—all are variables. A fixed variable in a successful merger and acquisition
: comprehensive planning at the outset, committed leadership from start to finish and swift execution.