Dhruv Sarda, Managing Director and leader of A&M’s Corporate M&A Strategy and Post-Merger Integration practice in Europe, will speak at the fifth annual Mergermarket European Corporate M&A Forum in London on 17th June. Dhruv will join M&A executives from IBM, Cisco, as well as the Editor-at-Large of MergerMarket Group to discuss proven integration strategies that companies can adopt to ensure a successful post-merger integration.
In advance of his panel discussion, we spoke with Dhruv to gather his perspectives on post-merger integration:
Q. What do you see as the most important qualities of the Chief Integration Officer?
The Chief Integration Officer is the most important person after the CEO regarding the realisation of a merger’s benefits. It is most often a fulltime role and one that should be filled as early as possible to ensure the integration proceeds effectively and efficiently.
Over the years, we have seen CEOs recruit the wrong candidate, often assuming the role only requires someone who is process-oriented with experience in leading large-scale change programmes. While the role does indeed involve a great deal of project management – for example, leading integration teams to meet targets and managing the overall integration plan – it also requires someone with a high degree of emotional intelligence, strong communication skills, the authority and ability to make tough decisions and a deep knowledge of the acquirer’s organisation.
Ideally, the Chief Integration Officer should not be someone from the target company who might be made redundant or unwilling to take risks. Instead, CEOs should look at their emerging leaders who may be a few years away from taking on leadership roles within the organisation. Chief Integration Officers are typically mid to upper-level executives with at least 15 years’ experience, and individuals who may be persuaded to undertake the role of Chief Integration Officer for a six to 12 month period.
Q. How important is the link between due diligence and integration?
Due diligence continues to be important, but a common mistake made by acquirers is to hand-off integration to the business soon after the deal is closed. This often means a different set of individuals from within the business is tasked with the responsibility of integrating the target with limited knowledge of due diligence findings, particularly risks associated with the deal.
Our experience suggests that knowledge obtained during due diligence is critical to the integration process. Moreover, it is important to think about integration, e.g. first 100 day plans, when conducting due diligence on the business. It is equally important to identify individuals who will be involved in the integration to participate in due diligence, alongside the acquirer’s M&A team and external advisers. This ensures knowledge is retained throughout due diligence and integration, and deal drivers are linked to integration objectives when developing the integration roadmap.
A&M is unique in that we offer a truly integrated approach to due diligence. We are often engaged by clients to provide operational, financial and tax due diligence advice, delivering the added benefit of identifying operational improvement opportunities that maximise synergy potential. Our clients find it beneficial to subsequently retain our operational due diligence specialists to support their integration leaders to accelerate benefits’ realisation during integration.
Q. What are key steps for a successful integration?
1. Start with developing clear integration objectives. It sounds simple, but it is important to remember why you are doing the deal and be conscious of alternative integration approaches that could deliver better benefits.
2. These objectives will help define the approach and overall integration roadmap. It is important to spend sufficient time planning the integration effort early on to ensure the integration proceeds effectively and efficiently. This starts with developing detailed integration blueprints by business area and function, identifying areas that you wish to retain from either the target or acquirer, as well as identifying quick wins and medium to long-term synergies.
3. Establish robust governance around the transformation effort with adequate resources to support both sides. Identify the Chief Integration Officer and fill key Integration Office roles as early as possible. This includes experienced project managers, someone to track synergies, a change management and communications specialist and HR roles.
4. Recognise that culture matters and sits at the heart of the target operating model. Ensure you have paid sufficient attention to understand the similarities and differences between both organisations.
5. Communicate at every step of the integration process. Share success stories and keep all stakeholders informed of future plans.
6. Use the integration as an opportunity to execute other transformational initiatives that you may have put on the back burner. This will minimise future disruption to the business and potentially deliver benefits over and above the initial targets set by the business.
7. Track synergies. It is important to have a relentless focus on synergies by initially identifying what they should be and implementing ongoing tracking mechanisms that enable the CFO and Chief Integration Officer to measure progress.
About Dhruv Sarda
Based in London, Dhruv leads A&M’s expanding M&A strategy and post-merger integration service offering for corporates. He regularly advises clients across the entire M&A lifecycle on topics including M&A strategy, commercial and operational due diligence, and post-merger integration.