The NeuGroup focuses on M&A at 2013 New York Cash Exchange; four steps to ensuring M&A succeeds after the deal is done.
One of the most important keys to the success of a merger or acquisition is how quickly and efficiently the target’s processes and procedures can be integrated into the processes of the purchaser. And while there is no one-size-fits-all approach to integrating a newly acquired finance team into the current program, there are some general guidelines treasurers can follow. This was the topic of a recent session facilitated by the NeuGroup at the Treasury Management Association of New York’s (TMANY) 2013 New York Cash Exchange conference.
With the NeuGroup’s Global Cash and Banking Group members Google and Merck weighing in, practitioners were shown the steps they can take to make integrating a new company a smooth and successful process.
One step at a time.
The panel described four major steps to follow in the creation of an M&A integration playbook, including the definition of the integration strategy, naming the integration team members and their specific roles and responsibilities, creating a detailed questionnaire of appropriate process questions and identifying specific milestones for success.
In defining the strategy, treasurers should always create – in as far advance is practical – a robust, standardized list of critical questions that must be answered within the first few days of the acquisition. These might include questions regarding policies, acquired company philosophy, banking structures and account access, as well as the acquired company’s approach to cash management. Also, defining roles and responsibilities is crucial. This leads to step two: identifying the integration team.
Naming team members is critical as it will give them – the sponsors, integration and functional leads – more time to prepare. That prep might also include other questions, which is step three, like identifying bank signatories, types of bank accounts and who has access, how daily cash is handled and some investigation of what investments are currently outstanding.
Stick with the plan.
Finally, stick to the playbook. While this might fall under the heading of a “the best laid plans…” scenario, executing the playbook with as few deviations as possible is best. Most importantly, execute the critical, balance-sheet affecting parts of the plan: cash, board approvals, and banking. And while having the team named ahead of time, do not hesitate to seek assistance when necessary — even if it is after the integration has started.
As usual, proper planning can prevent big bumps in the road to a smooth integration. In addition to the above, communication is key at all steps; communicate early and often with the acquired entity, and consult with tax and accounting to understand how the acquisition will integrate and to help identify potential challenges.