Like a physician with her stethoscope at the outset of a check-up, astute shareholders and directors should use the level and trend of a utility’s market-to-book ratio (MtB) as one of the first...
Corporate Integration: Keys to Success
Stage-by-stage advice from an M&A veteran.
as early in the transition stage as proves feasible. The selected manager typically will be a senior executive with experience on a large, complex transaction. The selected candidate needs to:
• Want the job (if there are family conflicts with the candidate being away or working crazy hours, find another candidate);
• Have the skills to address expected challenges (be respected, knowledgeable, and approachable, at a minimum); and
• Have the emotional intelligence/cultural awareness to work with the new colleagues and their organization.
Towards the end of the transition stage, the integration process begins to move to a much more public posture. When a deal is ready for announcement, the visibility of the integration effort increases significantly. Make certain to keep all stakeholders as fully informed as possible. Provide guidance to those who have been operating under restrictions, making it clear what remains restricted and what is now public information. It is usually impossible to undo the harm caused by a mistaken revelation.
As this stage approaches its end, the integration manager should have assembled a small core team. This team should have developed an inventory of the skills and other relevant characteristics for the managers to consider for the full integration team and have identified candidates to staff the team. Senior management of both entities should review the planned staffing of the integration team before closing. The staffing plan need not fill all positions; it should be adequate to identify essentially all working groups and set leadership for each task.
Closing of the deal completes the transition stage. Some celebration is in order; but make sure to include your new colleagues and to prevent any posturing that might be perceived as gloating. The more respect shown at this stage, the better the prospects for meaningful cooperation.
The closing is an important milestone that begins the life of the new entity. At this stage, the pre-work on integration should provide big payoffs in continued productivity, minimal distress for all workers, customers, and suppliers and contribute to success in many other ways. The historic approach to integration did not provide effective, timely actions, nor did it provide for effective, timely reactions to the inevitable and numerous surprises that occur post-closing.
The morning after the closing is the prime time for an all-hands meeting with a message from the CEO and an introduction of the integration manager and his core team. The team composition should demonstrate the commitment to being a new, cohesive entity formed from both sides of the combination. The location of the meeting(s) also take(s) on special significance for everyone.
Soon after the integration manager’s introduction, the manager should communicate several milestones to the new company, including when the full integration team will be in place, and when the team will complete the final integration plan.
The immediate post-closing message needs to convey that senior management has committed to implementing a coherent vision, that things will happen quickly, that the workforce will learn what is planned as soon as legally possible, and that everyone will be treated with dignity.