Ensuring your corporate transaction yields organisational transformation

Your corporate acquisition or merger has been completed. The deal is signed and the champagne popped. Then it hits you - that ‘fruit tree moment’ where you begin to worry if what you’ve planted will yield the expected results so your business can grow.

With only half of all transactions producing positive shareholder returns within the first year though, how can you make sure that the newly combined organisation will bear fruit?

Reaping the rewards of your transaction

Handled correctly, a merger or acquisition can help you achieve your organisational ambitions. They provide the opportunity to create critical market share, diversify services or markets and unlock the synergies that come from successfully combining organisations. The reward of such a step can be transformational for shareholders, management and staff, but the wrong approach has the potential to be destructive.

The post-merger or acquisition hangover

Those businesses that have suffered negative consequences as a result their transaction say that they didn’t:

  • anticipate the complexity of bringing two organisations together;
  • have a plan for how they were going to manage the organisation post-deal;
  • appreciate the difference in cultures between the two organisations; and
  • ensure that the perceived benefits were practically achievable.

The reality of a merger or acquisition is the corporate equivalent of getting married - you have two sets of everything: offices, employees/teams and IT systems. There’s inevitably something that will have been identified during the due diligence exercise that wasn’t big enough to derail the deal, but now needs your urgent attention.

Ensuring that you capitalise on the strengths of your combined businesses

Unless the organisations have worked together extensively beforehand then you’re unlikely to appreciate each other’s strengths and weaknesses. The result is that the leadership of the business gets sucked into endless lists and fire-fighting.

Post-deal, leadership teams should make sure that:

  • your customers understand the reasons for the merger or acquisition and have confidence that this is a positive, rather than negative change;
  • you give your staff confidence, stability and a clear vision for the future; and
  • you realise the synergies and other benefits that were the rationale for the deal in the first place.

By failing to prepare, you are preparing to fail

That ‘fruit tree moment’? It’s often said that the best time to plant a fruit tree is ten years ago. The second best time is today. With mergers or acquisitions the best time to plan for what is going to happen after the deal is before the deal.

This approach enables you to:

  • sense check that the envisaged synergies are achievable;
  • develop your post-deal plan;
  • set clear post-deal priorities; and
  • ensure that you’re in charge of communications to customers, staff and shareholders.

This pre-transaction planning will also provide a great opportunity for the two management teams to start working together effectively and help facilitate a more seamless transition into the newly combined organisation. It is only through careful planning will the newly formed business grow and flourish.

The message here is simple. Act today; shape tomorrow.

If you would like to know how RSM can help you unlock the most value from a business acquisition or merger contact us.