Let’s suppose the deal looks great on paper and the business advantages for a merger or acquisition are compelling. Before you close the deal, however, consider these sobering facts:

• Over half of companies show a 25% or greater decrease in customer satisfaction after a merger.
• Studies show that approximately 70% of your workforce is going to be resistant to change.
• Reviews of recent M&A activity show that 2 out of 3 deals fail to achieve announced goals.
• Approximately 50% of all acquisitions are divested in 5 years.

There is a bright side to this picture, however. It’s the fact that each of these problems can usually be traced to a single source—one that can be solved. That source is the fact that M&A difficulties are usually caused by executive management focusing too much on "the deal" and too little on the integration that follows. The solution involves identifying integration challenges during due diligence and leveraging plans, tools and resources to overcome these challenges as soon as the deal is closed.

As a CFO, you are one of the pivotal players in providing focus on the post-M&A integration efforts. Let’s examine some issues specific to you as a member of the executive team.

CFO Pain Points

As a CFO, you’re undoubtedly 100-percent committed to running the financial affairs of the business as it exists—before the business changes through a merger or acquisition. Before and after a deal is closed, you have to anticipate and plan for new burdens on your finance department, including:

• Maintaining day-to-day operations while many of your resources are tied up working the deal.
• Meeting the extra demands on the department with limited bandwidth, including;
  • Finding time to report on deal-related financing;
  • Maintaining cash continuity in the acquired company; and
  • Reconciling or eliminating duplicate financial functions (AP, AR, purchasing, payroll, etc.)
• Dealing with financial surprises that may not have been identified during due diligence, such as:
  • Uncovering outstanding payables;
  • Finding the acquired company is behind in audits; and
  • Learning of outgoing executive agreements and PTO commitments not included in the financial model.

How do you make the best use of your time to meet these new obligations? The answer is focus. Don’t try to do everything at once, but instead concentrate on these areas:

Aligning Integration Activities to Deal Drivers

Integration activities must be focused on rapidly and efficiently achieving the original value drivers that motivated the deal. These value drivers should determine how projects are selected and prioritized. Often, however, integrations get sidetracked by "pile-on" projects that are unrelated to the deal’s value drivers. While these projects may ultimately have some value, they divert time and resources from achieving the business value and ROI dealmakers originally envisioned.

Quick Tips

• Create 30-day integration plans versus 100-day plans. The 30-day plans should be designed to identify and deliver key milestones to ensure value is achieved frequently. Demonstrating early wins builds momentum with the new combined organization, stakeholders and investors.
• Create a deal scorecard aligned to original deal drivers and business objectives. Deal scorecards facilitate communication and focus projects, resources and risks.
• Avoid cost-cutting that reduces the value proposition. Organizations often cut key acquired resources early to achieve cost objectives and quickly realize they do not understand the work these resources did. Often they have to hire temporary resources to staff the gap—additional costs that can offset any early savings achieved

Dedicating Staff

Large corporations that are "serial" acquirers have departments dedicated to mergers and acquisitions. These departments typically have specialists in project management, business processes, finance, HR, IT, employee relations and communications; and a time-tested process for integrating an acquisition. For companies that do few acquisitions or those making their first acquisition, creating an integration team means pulling staff from their regular duties and making it possible for them to work full-time on the effort. However, such ad hoc integration teams often lack the experience and special skills required and need mentoring or coaching from outside integration specialists.

Quick Tips

• Allocate a dedicated integration team with members from both the acquiring and acquired organizations. Engage acquired employees early on quick-win projects so they feel more involved in the integration process.
• Establish a governance process for integration. Clear plans, consistent processes and communication will focus the team on the integration goals rather than questioning the deal.
• Build an integration steering committee, regardless of size. The steering committee will provide the team with top management visibility and much-needed quick decisions and direction.

Communicating Effectively

Communication plans for employees, customers, partners and vendors must be carefully considered before the acquisition is closed and put into effect on Day 1 of the acquisition. Without concise communication plans, the acquisition strategy and synergies expected may seem unclear to important constituencies; and communication with employees and customers can be random when in reality it needs to be controlled and precise.

Quick Tips

• Provide frequent, clear, consistent communications. There is no such thing as over-communicating when it comes to post-M&A integration efforts.
• Use different sources and channels. People respond differently to different forms of communication, so the team should use as many different forms as possible to get the messages out.
• Make sure communications include clear definition of the planned synergies. This will help the teams to understand their roles and impact to the value drivers.
• Don’t hold off on communication. Silence is deadly to employees and customers affected by the deal. "No news is good news" does not apply to post-M&A integration efforts.
• Conduct a daily executive check-point status call. Keeping the executive team in alignment with the post-M&A integration activities is essential, particularly during the first few weeks after the close. A standard daily check-point status call gives the teams access to immediate feedback and direction if necessary.

Increase M&A Success by Focusing on the Integration

Most mergers and acquisitions fail to achieve announced goals—not because due diligence was faulty, but because potential integration challenges were not properly identified and addressed as part of the due diligence process itself. When you know these challenges in advance, you can start dealing with them on Day 1 of the integration. CFOs and other key executives can greatly increase the likelihood of M&A success by focusing as much on post-M&A integration activities as they do on due diligence activities. You won’t be able to address all integration challenges, but if you focus on aligning activities to deal drivers, dedicating staff and communicating effectively, you’ll make the work of everyone on the integration time vastly easier and greatly accelerate your time to value.