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While the private equity deal is done, the next phase is just as important. Understand how to navigate the
post-merger transition effectively to set your organization up for long-term success.

Preparing for transition

Pave the Way for M&A Success: The Post-Merger Transition

  • Jeff Servais
  • 9/16/2020

Key insights

  • Mismanagement during the post-merger integration phase is often why mergers and acquisitions fail.
  • Every acquisition is different and there is no one-size-fits-all approach for a successful post-merger transition.
  • Leverage the same people in both the due diligence and post-acquisition phases, since they have seen your organization’s shortcomings firsthand and can help identify ways to move forward.

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The deal is done and the signatures are dry. You’ve identified the target acquisition, completed due diligence, and finalized the purchase agreement. You’ve spent an inordinate amount of time and effort to successfully get both sides to the table. Now, there may be a natural tendency to pause, exhale and celebrate.

While private equity deals can be an exhaustive process, the post-merger integration phase is just as important. Mismanagement during this phase is one of the most common reasons mergers or acquisitions fail. Be sure to understand how to navigate the post-merger integration for long-term success.

Overcome an organization’s lack of preparation

New owners frequently do not sufficiently prepare before a business transition. It’s possible the previous owner left unreliable operational and financial infrastructures in place, which could bring additional challenges for the new owner. Even if the infrastructures are adequate, the previous owner may no longer be around to answer questions. Lack of clarity on infrastructure combined with a gap in legacy knowledge can also impact your recently acquired organization.

Ideally, these pain points are identified during due diligence so you are prepared. If not, you must address these hurdles after the transition is complete. Every acquisition is different and there is no one-size-fits-all approach for a successful post-merger transition. Be sure to seek experienced guidance during the process. You can also leverage the same people in both the due diligence and post-acquisition phases, since they have seen the organization’s shortcomings firsthand and can help identify ways to move forward.

Identify transitional needs

A post-merger integration often brings several new projects, each with its own needs and timelines. For example, you may find a need to outsource the payroll and benefits mechanisms or hire a new bookkeeper. Realize that it may be a long and arduous process to work out costs, identify enterprise resource planning (ERP) software, and accommodate staffing.

These hard-to-calculate needs can make the transition a challenge. However, once you identify them, you can determine realistic solutions. Although you could hire staff and handle any challenges internally, doing so could be expensive in the long run.

Plenty of individuals or organizations can offer guidance and consulting, but you should first determine whether these solutions are right for you. Consider assistance from someone who:

  • Wants to see the organization succeed in your vision — not someone who wants to integrate their products or services
  • Can help navigate the heavy lift of the transition and then step aside to leave you confidently in control
  • Has experience dealing in the small-to-mid-sized market — and is especially skilled with founder-owned company transitions

How we can help

CLA has extensive experience with small to mid-market mergers and can help ease the pain of your post-merger integration. We don’t sell a pre-packaged set of goods or services, but instead take a customized approach. Our goal is to provide the resources to help your business succeed and support profitable growth. Connect with us today for more information.

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