Mergers & Acquisitions

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  • Mergers & Acquisitions
  • the teaboy
    Member

    I think this counts as ‘off topic’ and is a very very long shot!

    I’ve been asked by my employer to lead the integration of a prospective acquisition target.

    Financial and legal due diligence are being taken care of before we sign on the dotted line.

    We’ve never done anything on this scale before, so has anyone done anything similar and could send me some strategic/ products/ markets/ people/ processes/ technology due diligence templates?

    ta

    Premier Icon alfabus
    Subscriber

    Murders and Executions?

    send me

    Get your email in your profile, and ye shall have a little mail on one part of that.

    Premier Icon footflaps
    Subscriber

    You do know that something ridiculous like 95% of all M&As result in a net loss i.e. the new entity is worth less than the sum of the parts. Efficiency gains on paper never materialise and integration issues suck up all the management effort and they lose focus on sales and customers. Other than that, it will all be fine….

    Premier Icon ourmaninthenorth
    Subscriber

    Mail me. Email addy in profile.

    bikebouy
    Member

    Done a few yes, it’s hard work, be prepared for many toys to be thrown out of prams and looooong days.

    I count many of my expanding grey hairs on my head down to the last two I did.

    BOL.

    atlaz
    Member

    I can probably help out too, particularly in the technical due diligence area. I’ve been involved in half a dozen sales either as the buyer or the seller. Like bikebuoy says, lots of hard work, lots of long hours, lots of hurt feelings.

    the teaboy
    Member

    If you don’t ask, you don’t get! This is great.

    CFH – email now in profile. Thanks.
    Ourman – you’ll have mail in a minute…
    Atlaz – would welcome your help too.

    Footflaps – thanks for the pep talk!

    Am expecting this to be tricky but it’s bloody interesting.

    Premier Icon Kryton57
    Subscriber

    footflaps – Member
    You do know that something ridiculous like 95% of all M&As result in a net loss i.e. the new entity is worth less than the sum of the parts. Efficiency gains on paper never materialise and integration issues suck up all the management effort and they lose focus on sales and customers. Other than that, it will all be fine….

    I’ve been through 3 aquisitions and all that is true.

    However, “our” part (whats left of our original company) and its product is flourishing after 7 years, despite the fact we’ve been neglected for 3/4 years now – its the people involved which have now moved up the ladder enough to have enough of a semblance of control, and therefore I guess the legacy of the original company ethos has eventually shone through.

    Thats not all ways been the case for other company’s that have been acquired, no matter how much our Senior Senior people have tried to convince us that the new acquisition is “the future”…

    Teaboy, my advice based on what I’ve seen is

    a) Don’t count on the acquired company revenues to prop yours up often they drop as key people leave/are fired/people don’t adjust/loyal customers “trust” wavers…

    b) Don’t try to move the acquisition to your ethos immediately – look very hard at what works for them, encourage them to continue with the backing of the new entity, and work very hard to look at the differences between them and you BEFORE you make any changes, to your compnay or thiers. Often, (in general as well) Manager’s try to make thier mark by making changes, thats not always a good idea.

    slowmart
    Member

    Asking a question such as ‘ What’s the meaning of life? may have got a shorter answer

    Before you start, always plan for the worse outcome.

    No doubt there will be duplicity between the two businesses. Redundancies are likely and you will have TUPE to deal with. Notices will have to be given out and criteria set. If you’ve made redundancies before then you have a base to start with. No heres a pinch point. Is your company looking to minimise the redundancy cost or aiming to have the strongest business post deal. two very different scenarios which you will need a steer on.

    Don’t cut too deeply and look at the integration over a period of 12 to 24 months. It will take this long to do properly and draw done the maximum benefits. ID your short term goals and long term aims.

    You will need employment law advice and try and get the bill agreed and capped at a sum. This avoids nasty surprises.

    Cultural differences need to identified as do key members of the target business with all the worse case outcomes examined and hedged against. These cultural difference can’t be under estimated and a great deal of tact is called for.

    If you your two businesses offer different products can you cross sell products or services into either customer base.

    Accrue for a 20% drop off in the take over T/O as many of their clients will use the merger to price check the market. If you do lose key personnel they may take clients with them. I did and the actual drop was 6%.

    Employment contracts will need bringing into line as will salaries which again is difficult to do lawfully but not impossible.

    The longer term objectives will be further integration, MIS and accountancy will be at the for front here as will training.

    Always plan for the worse, have i said that 😉

    Good luck as you have golden opportunity to shine

    b r
    Member

    We’ve never done anything on this scale before, so has anyone done anything similar and could send me some strategic/ products/ markets/ people/ processes/ technology due diligence templates?

    Yep, done it a few times (global as well as FTSE100/250) as both an employee and consultant, IT – happy to pass on my experience and/or get the job done, what rate are you paying?

    bol
    Member

    I don’t have any templates I can send you, but I would strongly recommend making sure you’ve got the project/programme management skills and resource nailed. It can all seem a bit overwhelming unless you’ve got a really good grip on who owns what project and everyone is bought in to the timings and outcomes. Obviously it depends on the size of the organisations, but Managing Successful Programmes is worth a look for a bit of structure. It originated in the public sector in the UK, but a lot of big businesses use it too.

    Premier Icon jambalaya
    Subscriber

    @teaboy – email me if you need some additional thoughts, I’ve been on both sides of acquisitions (being bought and being the buyer) and being the buyer is the way to go ….

    Without being an @rse integration takes place after you’ve made the acquistion – so perhaps you’re being asked to create a plan for integration if the deal goes ahead – that’s less stress as you can always revise based on what you find if/when it closes

    codybrennan
    Member

    I’ve been involved in a large acquisition, as part of the taken-over party, and then became part of the larger entity.

    My role was mostly in integration and ultimately worked on the migration of a large customer base onto a new platform, owned by the buyer.

    Experience: much as others have said. The one bit of advice I’d offer is: avoid hubris at all costs.

    The final, total organisation, after only 3.5 years, ended up being worth only what ‘we’ were worth when they took us over. The buyers forgot that, while you can take those recurring revenues gathered from the acquired customer base, unless you treat them well then they’ll leave.

    Which many of them did.

    Staff were cut into deeply and redundancies were remorseless, with reliance being on their delivery model to deliver efficiencies. Unfortunately, their delivery model was industry renowned for its inefficiency and inflexibility.

    Products from our side of the business were largely removed, and the new parent company’s equivalent shoved in instead. We had spent a lot of time building products, had grown swiftly as a result. The final product offering didn’t really suit our customer base, and many left.

    Result is that the entire entity has not long been bought over by an ever larger entity, who I have to admit, does seem to be spending money and looking hard at where its going wrong. We’ll see. They’re not hubristic, I note, which reassures me.

    Digger90
    Member

    I’ve been through 2 acquisitions as the acquirer and 3 as the acquiree…

    All of them destroyed value.

    The latest, by a global Fortune 50 firm that prides (deludes?) itself that “All of our acquisitions have been successful” has resulted in:

    > 100% of the worthwhile staff from the acquired company leaving within 15 months – leaving the dross/no hopers

    > A customer attrition rate of 1 per month (versus zero for the prvious 5 years… yes: Zero!)

    > The products being repriced making them unrealistic in the market

    > Key partners walking away in frustration

    Yeah – I’d say it was a disaster.

    the teaboy
    Member

    I really didn’t expect this level of response – thanks everyone, this is ace.

    Where we are now: legal and finance dd being done by experts. I’m the strategy/ project/ programme/ change lead and I’ve been let into the NDA a month prior to planned signoff.

    Things that I’m going to spend most time on include:
    – Understanding our Directors’ expectations
    – Minimising the risk of the key people leaving the target – it’s an information-driven industry so people are key
    – It’s an emerging market away from our core so we’re leaving it intact as an entity (and, most likely, a brand) so we need to plan for the succession of the owners
    – Culture, strategy, lessons learned and other intangible stuff
    – How can we make the most of what they’re doing across our own core areas? There’s definite potential there.

    Make sense?

    Thanks everyone

    what rate are you paying?

    Bourbon or Mince Pie? 😆

    b r
    Member

    – Minimising the risk of the key people leaving the target – it’s an information-driven industry so people are key

    Nope, customers are key. You can easily/expensively ‘handcuff’ people, but can’t force customers to stay.

    Premier Icon TexWade
    Subscriber

    Not bothered reading this but there may be some useful stuff in here about post acquisition issues.

    http://www.deloitte.com/view/en_GB/uk/market-insights/mergers-and-acquisitions/0f81943ebba1a310VgnVCM3000003456f70aRCRD.htm

    the teaboy
    Member

    b r – Member
    Nope, customers are key. You can easily/expensively ‘handcuff’ people, but can’t force customers to stay.

    Good point but if the product/ service stays at its current level of quality the customers stay. If some of the key people leave before I’m up to speed with running the thing, the product quality suffers and the customers leave. Chicken or egg?!

Viewing 19 posts - 1 through 19 (of 19 total)

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