The key steps to take when integrating a business you have acquired

What you do in the first 100 days after buying a business will often determine the ultimate success or failure of the venture. Whilst negotiating a deal, it is critical to keep one eye on the integration strategy and to form a plan to enact immediately after the deal completes. There also needs to be an integration team ready to step into action and drive the process. After all, whilst external diligence can be very helpful, there will be unexpected requirements and events, and sometimes what you think you are acquiring isn’t what you actually get. The integration team therefore needs to include people from both businesses, in  executive, operational and financial roles, all with a clear idea of what the deal rationale was and what needs to be done and when.  

The first step is to ensure continuity of production or service. This means communicating with all the key stakeholders, covering staff, customers and suppliers. Change of ownership often also means a change in culture, or at least a perceived change, which needs to be carefully communicated to staff in order to get their early buy in and avoid staff attrition or any dip in productivity or performance. A useful tool is to hold regular ‘town hall’ meetings where senior management stand up in front of the staff and give updates and answer questions, providing an additional layer of engagement and transparency at a crucial time.

You must also engage with customers and suppliers, with a positive message [about the enlarged business and] of continuity of supply and payment, which if handled well can also lead to new opportunities. There is also a large administrative job to be done to update customer and supplier contracts, employee payroll, HMRC records, property leases, to switch banks etc.

Often, acquisitions entail cost synergies which may include removing duplicate roles, closing down facilities or rationalising work forces. This needs to be dealt with sensitively, openly and fairly, and sometimes with legal counsel.

Once these early tasks are complete, it is time to focus on growth drivers, be that revenue or margin growth. This can include cross selling opportunities between the enlarged group, [leveraging] enhanced buying power, pooling resources, or introducing new operational routines and ways of working. Again, a team needs to be assembled to drive this change, and suitable KPIs need to be agreed and then rigorously monitored.  

Most acquisitions don’t run smoothly and it is often due to a lack of planning or because integration never truly occurs on a meaningful basis. But if you follow some of the principles laid out in this article then you stand a good chance of successfully harnessing the potential of the acquisition.  

Maven is one of the UK’s most active private equity investors and is passionate about working with ambitious businesses to achieve their strategic goals and maximise growth potential. If your business, or the business you advise, is looking at private equity as a solution to fund future growth we would love to hear from you. Speak to one of our investment team by getting in touch at funding@mavencp.com.