The integration process will include many different elements, ranging from external activities such as branding to internal activities such as looking at costs and reducing redundant activities across organizations. For example, Horner says, “There’s a lot of overlap in the types of materials that are purchased, everything from packaging to raw material, so that creates a lot of synergy opportunities.”
Overlapping activities can also generate competition across sites within a company. “Making sure that the individual sites are not competing against each other for the same opportunity is the real key aspect to integration,” Horner adds. He advises looking closely at the sales and marketing process and the pipeline of new opportunities to identify redundancies.
Of course, all of these activities can benefit from having the right people in place to identify opportunities.
Putting Together a Team
Compiling the right team can create value at every step during a merger or acquisition.
“This industry in particular has a tendency to try to do a lot of stuff on its own without seeking outside help,” Del Pero finds. Yet, as he is quick to add, “Anybody that’s looking to go through some sort of a transaction needs to get the proper outside help. Don’t try to do it yourself. You invariably will make life more difficult for yourself or leave some value on the table.” As Del Pero says, you wouldn’t try to sell your house without a realtor. Similarly, you shouldn’t tackle an acquisition without a guide.
In performing due diligence, Konert emphasizes the importance of having the guidance of a strong financial person – whether that’s a CFO, an outside auditor or a trusted accounting advisor. “Usually the initial focus of the diligence is around the financials and making sure that corroborates with the valuation. So having a strong advisor, whether that’s internal or external, who has experience getting ready for a sale process from a financial standpoint is key to having a leg up in terms of getting a deal done faster,” he says.
Weyant recommends engaging external professionals in legal, financial, tax, environmental and commercial areas during the due diligence stage. “Such resources are the experts and can help uncover any issues associated in the acquisition process,” he says.
From either side of the deal, it’s important to understand who will lead the company into its next phase. “If you have an owner that’s looking to exit the business after he or she sells it, leaving a void of leadership, you’ve got to look at the decision-making capability within the business,” says Horner. “If there’s potential for a leadership void, the acquiring company needs to more thoroughly assess the remaining management resources to ensure the business can run effectively post-acquisition.” Rathbun says it’s helpful for companies to have a “strong second level of management in place – financial, operations, sales and human resources.”
The leadership question is one that should be held early on between companies. “Be open and candid about the role of the owner post acquisition, i.e., their desire to stay engaged or move on to other endeavors,” Rathbun says. “The acquiring company should consider all requests and be open and candid as well.”