integration management approaches and practices for timely integration john g. mathers 2010

Integration Management Approaches and Practices for Timely Integration

John G. Mathers 2010

Content

• Acquisitions and integration• Approach to integration• One story … in brief• Integration issues and concerns• Potential learnings:

– Basic learnings– Other learnings to consider

• Application of learnings– Key actions– RUP– Worksessions– Project management

Acquisitions and integration

Study/1 of 8,824 U.S. mergers re shareholder value:• ~80% fail to enhance shareholder value

• ~20% succeed due to: 1) cultural appreciation; 2) internal communications; and 3) practical plans / execution

Study/2 of failed mergers: >50% did not achieve expected results because:

• Failure to choose right company

• Lack of alignment on – and communication of – a common vision for the “two” entities

• Inability to handle cultural issues

• Did not develop & implement appropriate approach to integration

Sources: /1 MergerStat 2001/2 Booz Allen & Hamilton 1999

Key integration aspects defined

Cultural appreciation:• Assessment of two cultures and strategic approach to integration

including common vision, objectives, timeline, and metrics

• Ongoing monitoring of implementation

Internal communications:• Sharing integration processes, action plans and success

• Building alignment on issues, objectives and plans

• Linking/working across organizations (entities and internal)

Practical plans and execution:• Detailed and actionable tactical plans including legal, finance,

compliance, accounting, policy, human resources, account/asset conversion, account management, custody/funds, marketing, service, customer reporting, trading, risk, and technology

• Project structure, reporting and management against metrics

One approach to integration

1. Separate and unequal (pre-closing)• Due diligence• Pre-deal communications and introductions

2. Consummation (post-closing)• Cultural assessment• Integration assumptions and issues• Integration plans and communication

3. Working together• Networking across/within entities• Integration execution

4. Consolidation• Policies and procedures• Realizing strategic and cost benefits

Integration phases Potential integration activity

Conceptual approach to integrationPotential activity by integration phase

Time

Fo

cus

of

Act

ion

Hi

Lo

Phase 1Separate & Unequal

Phase 2Consummation

Phase 3Working Together

CulturalCommunicationsPlans / execution

TacticalPlanning

TacticalExecution

ProjectStructure/

ManagementIntegration

Assessment

IntegrationStrategy

Issues/Assumptions

ObjectivesAlignment

TeamDevelopment

ProjectReporting

IntegrationDecision-making

StaffCommunications

Program

Senior MgmtCommunications

Phase 4: C

onsolidation

One story … in brief

• Acquisition of FSI company in 2000– Due diligence included detailed business and technical assessments– Strategic decision to leave acquisition intact to pursue their strategy– During downturn acquisition provided support to parent as

alternative to losing some clients

• Three integration efforts were initiated:– One parent, one acquired company and one joint– Various reasons – including economic realities – led to efforts being

put off

• September 2003 management integration decision based on need for operational efficiencies

Potential integration issues

Cultural appreciation:• No cultural assessment considered or completed• Cultural strategy does not align with the cultural focus of acquiror or

acquiror’s division selected for acquiree• Acquiree’s management is too quickly moved aside• New management placed in acquiree are not a cultural fit• Acquiror moves faster than aquiree’s culture can respond in an effort to

take advantage of acquiree’s competitive, organizational and technical competencies

• Synergies are overestimated and the effort to achieve them are underestimated

“We came [to parent HQ] for an integration meeting [where] they tried to understand what we were doing, but not a lot of them had done the research they should have to prepare.”

“The best thing [parent] did is to find someone that fit our culture. Without [him] integration would have been a problem. He was the Chinese wall with [parent] so we didn’t get run over.”

Potential integration issues (cont.)

Communications:• Acquiror mid-level management do not understand strategic or tactical

value of the acquiree’s business • Acquiror due diligence personnel do not create relationships with acquiree

counterparts in preparation for future partnering • Acquiree personnel are not sufficiently educated regarding acquiror’s

organization, culture and vision (way they do business)

“During the last four years I think that everyone has talked about integration but it has only been talked about. We have gone through the integration [effort] four times.”

“There were a lot of people who came down to visit during the due diligence. They would get really excited about [what we were doing] and say how much it was like [they were] 20 years ago.”


Communications (cont.):• Acquiree personnel are not educated regarding the impact of

merger/integration on their employees• Communication and ongoing management support by acquiror diminishes

over integration period • Senior level acquiror management does not visit regularly to show interest

and support

“At first it was the technology they wanted and the feeling was ‘do they want us?’”

“Many people [at acquisition] didn’t know what was happening [with the integration] and they needed to know.”


Practical plans / execution:• Acquiror policies and procedures, especially human resources, are too

quickly overlaid on acquiree

• Access to acquiror’s infrastructure for communications and partnering is not available quickly

• No clear understanding of integration cost early in the effort

• No clear view of resource requirements and constraints within each organization

• Project planning and reporting unstructured

“Everything doesn’t have to mirror what [parent] has done.”

“[Parent] could have been quicker at including [acquisition] in the [corporate] network. This made us feel like a second-rate service.”


Practical plans / execution (cont.):• Management of both organizations are not aligned on business objectives

(and model) that drove the merger

• Management of both entities are unable to make timely decisions

• Neither organization understands integration dependencies across / within and cannot clearly articulating them to management

• Regular coordination and alignment is not part of the project management process

“Good intentions are just not enough. I don’t care how we get there only that if we are going to do this, we need commitment and sponsorship from those that can pull this off.”

“Getting everyone on the same page is critical. This is elementary.”

“As to business decisions, I want the decisions that are made to be clearly in support of both [parent and acquisition].”

Learnings from Numerous Projects

General:• Find someone to manage the business that fit the culture • Have the new management of the acquired company act as a go-between

with the parent to guarantee appropriate speed of cultural, organizational, procedural and technical integration

• Keep the management of the acquired company involved during transition but not beyond

• Everything – especially HR and other procedures – do not have to mirror the parent organization at the start, even if it looks like an improvement

• Use a modified Braille process to educate the management of the acquired company about the parent. Educate them and let them experience it

• Continue to provide open financial and other support systems to build appropriate infrastructure in the newly acquired company

• Establish a regular (every six months or less) program of visits by senior level management to show interest and support

Learnings (cont.)

General (cont.):• Prepare the acquiring organization to receive/ understand the value of the

new business in detail; this makes contact across the organization easier and more collegial from the start

• As part of the due diligence process, those managers reviewing the acquisition opportunity might to include introductory interviews with counterparts at the prospect company

• Quickly place the new organization into a part of the business that fits their value and possibly their culture; this makes the new subsidiary feel included

• Provide education to the entire staff of the new subsidiary regarding the impact of the acquisition both on the organization and on the individuals; this builds commitment at the individual level

• Get the new subsidiary connected to the parent’s network as quickly as possible; this gives them an experience of inclusion and facilitate communications and working relationships

Learnings (cont.)

Cultural appreciation:• At the point of acquisition, management of both organizations have the

best view of the synergies; this is the time to develop overall integration vision, strategy and timeline, and to foster it through the layers of management

• Timely decision-making processes across and within management of both entities must be developed and fostered for integration project success

Communications:• Identify key integration stakeholders / interested parties in both

organizations; gain agreement to participate in decision-making• Define key integration assumptions and issues across and within both

organizations• Communicate and align integration vision, deliverables and dependencies

across and within both organizations

Learnings (cont.)

Practical plans and execution:• Develop high-level and then detailed project plan with critical path;

stakeholders / interested parties must contribute and agree

• Define overall project budget, resource allocation and run rate metric

• Allow each sub-project or track to manage their actions as they see fit – as long as they can report on progress weekly

• Develop and agree to project management exception-based system focused on near-term deliverables and key project metrics through project team to stakeholders and sponsors

• Support regular re-alignment of plans and critical path based on shifting/new dependencies

Application: key actions

IntegrationAssessment

Communications across/within both entities

Issues/Assumptions

ObjectivesAlignment

TeamDevelopment

Ob

ject

ives

IntegrationStrategy

IntegrationDecision-making

CommunicationsProgram

Str

ateg

y

Tactical PlanCritical Path

ProjectManagement

StakeholderAlignment

Sta

keh

old

ers

Execution

ProjectReporting

Act

ion

Re-AlignmentPlanning

CulturalCommunicationsPlans / execution

Integration with RUP

StakeholdersWorksession

Vision

StakeholdersNeeds

Func

tiona

l

Req

uire

men

ts

use

case

Non-Functional

Requirem

ents

support

Analysis

Design

Implementation

Business Model

Business Case

LifecycleReview

LifecycleReview

ObjectivesWorksession

Requirements

StrategyWorksession

RUP Documents Actions Worksessions

Critical worksessions

• Strategy Worksession: – Objective: Review cultural assessment and develop overall integration

strategy, sponsorship and communications process– Audience: acquiree senior-level management and acquiror senior-level

management directly impacted by merger value proposition

• Objectives Worksession: – Objective: Identify critical issues, agree on integration objectives, define key

initiatives and build a strong working relationship– Audience: key group of managers responsible for critical integration actions

across both entities

• Stakeholders Worksession: – Objective: Define and align detailed project plan and critical path in order to

assure that all resources are efficiently focused and aligned to guarantee completion on schedule and within budget

– Audience: all stakeholders and interested parties across both entities

Project structure/reporting Aligned project plans – completed at the track level

and synchronized at the project level – are the basis for execution management and reporting

Track teams project management meetings: Purpose: near-term focus on – and management of – weekly tasks to

meet aligned track and project level deliverables Members: all track, support, and implementation teams Reporting: track leads: weekly to Project Office contacts against aligned

plan on an exception-basis Timing: weekly for 30 minutes

Project office team meetings: Purpose: near-term focus on weekly key tasks to meet aligned project

level deliverables; decision-making re weekly resources Members: permanent project staff, appropriate technical representatives,

and subsidiary communications coordinator Reporting: project-level performance to project plan; track-level exception

items Timing: weekly for 30 minutes

Project structure/reporting (cont.) Steering committee meetings:

Purpose: project-level focus on key deliverables; decision-making re monthly/quarterly resources

Members: sponsors and key stakeholders Reporting: project-level performance to project plan; recommendations re

key deliverable resourcing issues (impact on schedule or budget) Timing: semi-weekly for 60 minutes

Stakeholders committee meetings Purpose: project-level update on performance to plan; discussion of

strategic project concerns Members: all stakeholders Reporting: project-level performance to project plan; strategic concern(s)

for consideration (if any) Timing: monthly for 60 minutes

MON TUE WED THU FRI SAT SUN MON

Stakeholders Committee Track Team

Project Team Steering Committee

Implementation opportunities

• Phase 1: separate and unequal– Complete cultural assessment– Use assessment to develop integration strategy

• Phase 2: consummation– Complete key interviews to identify critical issues– Use interviews to help focus on issues, outcomes and timing

• Phase 3: working together– Complete preliminary vision and business case to drive inclusion of all

tasks– Use deliverables to educate all stakeholders on dependencies and

develop critical path

• Phase 4: consolidation– Regular work reviews and re-alignment drives timely results

Support materials

Documents:• Integration assessment• Critical issues list and management• Integration check list• Vision & Business Case (RUP)

Forums and Worksessions:• Objectives worksession• Project socialization – table of content• Project plan alignment worksession• Project weekly work reviews

3020 Bridgeway, Suite 414, Sausalito CA 94965Tel: 1 (415) 381-4660 Email: [email protected] Web:

www.eVoassociates.com

3020 Bridgeway, Suite 414, Sausalito CA 94965Tel: 1 (415) 381-4660 Email: [email protected] Web:

www.eVoassociates.com

Speeding the natural evolution of your business

integration management approaches and practices for timely integration john g. mathers 2010

Documents

integration processes

timely integration john

issuesintegration plans

action plans

internalpractical plans

strategic approach

conceptual approach

account management