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Weighing the Odds 

 October 5, 2022

By  Steve Nunn

Play the Hand You Are Dealt

This is part of a short series of postings that discuss how integration teams must accommodate the set of criteria they are given by the Deal Team – those that carries out an acquisition.

Part 3 – Weighing the Odds

Card players consider odds all the time. They (usually) use their judgement when they consider opposing scenarios: stay where I am and have a chance of being beaten or continue to play and have a greater chance of winning.

With acquisitions, while the Deal Team is concentrated on finalizing the deal, there is still uncertainty that the acquisition will take place.  With that is the decision on when to bring in the Integration Team.

Many acquires delay engaging the Integration Team because they don’t want to incur the cost of engagement in case the deal falls through. However, not bringing them in increases the odds of failure, as it allows little time for:

  • Analysis of the two businesses to find where the possible issues will be
  • Discovery of opportunities/synergies that the integration team can realize
  • Knowledge transfer between the Deal and Integration teams
  • Planning, and preparation for announcements and kick off

With a poor kick off, companies immediately put the integration success in jeopardy, and are likely to never achieve the desired return on investment.

On the other hand, the more time there is to prepare the integration, the more favorable the outcome. Earlier insights into the target company’s people, products and operations gives more time to see opportunities, and time to plan an optimal strategy. 

It has been proven by successful serial acquirers such as Sisco Systems or GE, that the earlier an integration team is brought in, the more successful they are.

As we have said before, which is the greater cost: bringing in the integration team 2 weeks earlier, or an acquisition that fails to achieve its target revenues?

If you need help with planning, setting up, announcing, or delivering an acquisition integration, contact us

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