ON POST ACQUISITION INTEGRATION

It would be very unusual for the owner manager to be allowed to walk away from the company before the ink was dry on the sale and purchase agreement. The chances are that you and your team would be required to remain with the company for a certain period of time after the sale and that you would have a significant incentive payment linked to the performance of the company during this period. It’s the buyer’s final guarantee that what they bought is what they got.

Remember also the previous statistic I quoted; over 80% of all acquisitions perform worse after the sale and thus fail to reach the expectations of the buyer and indeed the seller.

Post sale integration is therefore an extremely important issue that should be discussed, and a plan of action agreed during the sale and purchase negotiation.

Companies are not just figures on a set of accounts; they are living entities, much like a family. They have culture, values and ways of doing things. Employees have tremendous pride and loyalty to their company and company brand. Bringing together organisations with different cultures and backgrounds can have a destabilising effect on both organisations.

It could be a very good idea to form a post-acquisition integration team, consisting of management and staff from both companies to positively tackle the issues.

Integration – Firstly, just how much integration is there to be between the two organisations? What are the new reporting lines and management structure?

Communication – Customers, employees, suppliers, and partners must be fully communicated to about the sale of the company and the positive benefits it will bring to them. Key customers should be visited by senior management from the two companies. The timing of this is very important, it must happen immediately after the sale, which means planning must be done well in advance of the sale completion, as must joint press releases which should be issued immediately after the sale.

Identity – What will be the identity of your company or the combined new company after the sale? Brand identity may be a significant issue for your customers and employees. Again this must be tackled in a very positive way by the post-acquisition team. Immediate actions may have to be taken to re-badge the company and therefore redesign and reprint company stationary, literature and signage will have to be undertaken.

Economies of scale – The buyer of your company will be looking for economies of scale within the two organisations, particularly in the administrative functions of the company. This inevitably means redundancy and tackling all the potential destabilising consequences on the company that such actions can bring.

Synergies – The chances are your final earn out and exit route will depend upon the synergies of the acquisitions working well in practice, which means you cannot, yet, sit back and enjoy the benefits of the sale. The two years post-sale of the company were most probably some of the hardest for our management team.

Employment Terms and Conditions – The extent to which these will have to change will depend upon how much your company will be integrated into the buyer’s organisation. If there is to be close integration, then harmonisation of employment terms and conditions, including pensions, will be a key issue to be addressed. This again can be a very destabilising factor for the staff.

Post sale company performance and its ultimate continuing success are really driven by pride rather than money. Being proud that you have built something up and having the desire to see that venture continuing to prosper and grow.


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