Integration according to plan
Integrating a new company into the group is a big project, firstly for the acquired company, but also for the parts of the company with which it has to work. From the discussions at the time of acquisition and the DD study, there is an idea of what the strengths and weaknesses are and how the business fits into the whole. Implementation requires a planned approach with priorities, actions and milestones. CM&P partners have the experience to guide this process to a successful integration.
Integration and cultural differences
The successful integration of acquired companies depends to a large extent on them working well with the company they are joining. Within the Group, sufficient attention must be paid to the acquired company and the cultures within it. Branches abroad add an extra component to the attention to cultural differences.
In the immediate aftermath of an acquisition, guidance and communication are also needed from abroad to do what the new owner wants to do. Communicating this clearly and, if necessary, explaining it verbally is the key to success in the first few months after the acquisition. In the Netherlands there is sometimes a lot of poldering, whereas just across the border decisions can be communicated in a meeting. And what do you do if you are not allowed to directly contradict a superior, if the other person does not want to disappoint you, if the CEO of a branch is on a pedestal, or if you are not allowed to directly address an older person out of respect? Many of CM&P’s partners have worked in international companies for many years. They are used to dealing with different cultures and getting the best out of people.
Cultural differences also play a role when dealing with external parties. Sometimes countries (such as the US) are more aggressive in promoting their service offerings. Together with management, we are able to separate the wheat from the chaff and work cost-effectively.
Dealing with staff – the PE firm
As a trusted partner to the PE company, we are familiar with the practices and values that need to be instilled in the acquired businesses. With a CM&P partner, the PE company gains an ambassador who makes it easier for management to engage with the PE company.
Dealing with staff – (re)structuring
In a buy-and-build scenario, as activities are added to the group, there will be several moments when the management structure changes. This may be at the very beginning through a loss of control, as in a reverse takeover. A regional or divisional structure may also be created. There are also times when a company is acquired and it is immediately clear that it will be closed. In such cases, management and staff should be consulted about their position in the new entity and an appropriate redundancy plan should be drawn up in the event of closure. If nothing else, it is in the interest of all parties to part company properly. The CM&P partners can play a role in this from a business and financial perspective.
A company may be underperforming. CM&P’s partners can guide management to get things back on track. In our practice we have taken companies from positive profit and negative cash flow to negative profit and positive cash flow. Of course, both have to be positive from an existing operation. In such cases, there is often a lot going on: reporting is not in order, working capital management, customer service, goods flow and warehousing procedures leave a lot to be desired, unnecessary process steps are eliminated, etc. With our analytical view and experience, CM&P partners can quickly advise where intervention is needed. Incidentally, we are usually called in when there is less going on.
Dealing with staff – carve out
In divestiture situations, the acquired business may have been a relatively small part of a multi-billion dollar business. In practice, this means that the acquired businesses have received relatively little attention from regulators, such as the external auditor and tax authorities, because of their low materiality in the bigger picture. After the acquisition, the company as an independent entity suddenly gets all the attention, as previously considered small transactions become large for this newly independent group. In our experience, the acquired employees are often enthusiastic, but tasks are added that they have not experienced before, either because they were a service of the group or because they were a specific task of the head office. CM&P’s work focuses on taking on projects that cannot be adequately handled within the acquired company and transferring them after securing them within the company.