Often the biggest focus of an M&A deal is getting the transaction done. With so much at stake leading up to the acquisition, enormous attention is paid to financial due diligence, tax diligence, quality of earnings review, legal review, and myriad other requirements characteristic of the pre-deal process. Despite the Herculean efforts to get it right, an estimated 50 percent of deals fail to realize expected values, and some even destroy value, post-acquisition. Too often, poor planning and follow-through to execute against the thesis for the deal or its value creation and synergy plans are to blame. However, by focusing energies on planning and preparing for both the initial days and months after the acquisition in advance, companies can build a roadmap to maintain and add value to the deal; ensuring that the whole doesn’t end up being less than the sum of its parts. Paramount to this is an acquisition (and potentially integration) plan that considers key risks and opportunities across each business function, unit, and geography of the business.
Why You Should Develop, Implement and Execute a 100-Day Plan
Although a post-close execution and/or integration plan should be part of the pre-deal process, some may assume that seemingly straightforward issues, such as acknowledging employee concerns and messaging to customers and vendors, or mundane tasks such as the transfer of signing authority on bank accounts, will naturally get dealt with when the time comes. This optimistic notion can lead to a drastic loss of value overnight. What happens if seemingly small operational details are overlooked, resulting in a logistics issue that leaves you unable to fulfill customer orders? Or, what if succession risk was ignored and key people suddenly announce that they are leaving and taking clients with them? A seemingly minor detail can become a big deal that impacts the business and people’s lives. Creating a robust governance structure and transaction execution/integration plan that identifies these needs results in a smooth, post-acquisition start, from day one.
Sometimes in merger situations, there’s a reluctance to make decisions that alter processes already in place. After all, each company has been running smoothly, separately. They are more than capable of “doing their own thing”. This may work during the initial post-merger period. However, down the road, sub-optimal or competing conditions are often identified. Synergy creation, such as maximizing procurement opportunities, can be more difficult to identify and implement the longer businesses have been ingrained in their individual post-deal processes. Take advantage of the momentum and energy created by your transaction to effect positive change from day one.
Protecting and Enhancing Value Using 100-Day Plans
How can you get an effective 100-day plan in place for your deal? The simplest way is to bring in someone with the right expertise.
If you are going to rely on a third-party expert to develop your 100-day plan for effective integration, it’s best to bring that expert in 2-3 months in advance of the closing date (or even earlier in large, complex deals) so that the expert can perform diagnostics to uncover opportunities and commence planning to develop a deal-tailored 100-day plan. In situations where there is less time available for planning and preparation, integration experts can still protect and enhance value in the deal by formulating tactics for those critical early weeks and months.
BDO professionals would be happy to speak to you about our expertise in developing and executing 100-day plans. BDO empowers management teams with the tools and confidence to make critical decisions. Acting as an independent third party and boasting teams who lead and manage M&A-related processes and integration efforts as their dedicated area of expertise, BDO provides businesses with roadmaps for performance improvement, value creation, and drive synergies to deliver on the deal thesis. At BDO we rely on our ‘tried and true’ deal execution playbook. Whether we’re creating an integration plan, 100-day value creation plan, or a two-year performance improvement plan, we can do so with no disruption to the core of your business. While the pre-deal process may be fraught with chaos, we strive to bring order to the process and put you on a smooth path after the deal.
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