04 2 / 2010
Merger Frameworks
In the past 2 years with my start up; I had the opportunity to work on 4 different Merger & Acquisition opportunities. Before then, I had no experience with it what’s so ever. So I had to learn fast. Luckily, I found a great podcast series done by Booz Allen & Hamilton along with some other resources online. I was able to take the different ideas and apply it to the different opportunity scenarios. I can say their lists of advice were all relevant and applicable to all cases.
9 things to what not to dos and try to prevent:
- Not having guiding principles
- No ground rules
- Not watching details
- Poor stake holder outreach
- Overly conservative targets
- Integration plans not in financial plan
- Cultural disconnect
- Keeping information too close
- Allowing wrong changes to the plan
I think this list not only applies to merger & acquisition deals; but also partnership deals of all sizes.
10 step framework I was able to use in each case:
- Strategic Intent; people really have to understand why they’re doing it and what is the value created
- Building stakeholder enthusiasm; if founders or key mgmt aren’t happy; things can fall apart
- Gaining internal understanding; not just what company does, but also why?
- Forming one company; absorption or 2 under 1 approach. 3 P’s people, process, place
- Capturing value; revenue and cost reduction
- Energizing team; getting right people in the right place and preventing people to act as lame ducks
- Stabilize operations; every time a change is made, what problem can be anticipated?
- Closing the deal; legal stuff
- Communication Plan; is this to cut cost or is it a growth plan?
- Identifying integration team and line mgmt; without it, things fall apart
Using these 10 steps is great way to set plans and figure out what deliverables does each team need to give.
Also, what was probably the most helpful was doing employee engagement surveys. Fastest way to recognize and address problems. Everybody wants to be heard, and so this is a great way to reassure people that they are and they are important. You really don’t want to lose all the good people because they didn’t understand the merger.
Employee Engagement Sample Questions; scale 1-5
- How much do they love about the company?
- Would they recommend others to work at company?
- Do they understand the strategy of why the merger is happening?
- How much would they go above and beyond on what’s expected them to?
People who answer high on these type of questions, you know they’ll stick around and make things happen. I was running these surveys anonymously with with fill in forms as well monthly. That way if people wanted to bitch, then they could without fear of penalty. And doing on a 1-5 scale, you can quantify and compare month over month results.
