Publications

• 30 Second Ideas
• Accounting Updates
• Alerts
• Articles
• Business Surveys
• Construction Edge
• Healthcare Edge
• Insurance Edge
• Legal Talent
• Manufacturing Edge
• Not-for-Profit Edge
• Quick Links & Good Ideas
• SEC Edge
• Strategy Insights Blog
• Surviving the Upturn
• Tax Highlights

Acquisition Integration: Culture versus Strategy

David Spitulnik, Blackman Kallick’s Director of Strategic Services, recently participated in a panel focusing on the integration of business acquisitions at the Midwest Private Equity Conference in Chicago. Also participating on the panel were Frank Cheswick, Aldine Capital Partners (Introductions); Terry Bressler, Stout Risius Ross Advisors, LLC (Moderator); Al Ritter, Ritter Consulting Group; Dana Gescheidle, Riveron Consulting; Peter Offermann, HT Capital Advisors LLC; and Chuck Emmenegger, Omnia Group.

Terry Bressler kicked off the conversation by noting that acquisition-integration planning and execution were critical elements in the success of any deal. The panelists wholeheartedly agreed and the discussion quickly gravitated to the growing understanding that integration planning needs to start very early in the process. The consensus was that it should begin during the due diligence phase, not when the transaction has been documented. Furthermore, it was highlighted that integration needs to continue until there is a single culture in the combined entities. As the culture discussion continued, the following quote (generally attributed to Ford Motor Company) was highlighted: “Culture eats strategy for lunch, every day.”

With culture as the backdrop for the discussion, the panel addressed several key questions that should be considered while planning transactions, even if the deal includes only a small piece of an organization.

• Before entering into due diligence, have you and your team clearly identified integration issues that need to be addressed?
• Have you reflected these issues in your letter of intent?
• Do you understand the “deal breakers”?
• Have you assigned a senior member of your team to be responsible for integration, pre- and post-closing?
• Are you prepared to capture the nuances of the disparate systems, including, but not limited to, ERP, HR, financial, sales, etc., and do you understand the cost and time needed to integrate these systems?
• Have you identified what is important to your culture and the target’s culture AND what you need to integrate the two? In other words, do you clearly understand whose culture (or which parts of the two cultures) will survive?
• Do you know what motivates the employees and stakeholders of the target company and how these motivations mesh, or don’t, with those of your company?
• Do you have a communication plan for BOTH companies?
• Finally, how will you measure the success of the integration? And have you identified interim measurement points to ensure you are obtaining that success?

While there is no set of guidelines to ensure success of acquisition integration, answering the questions above and focusing on the underlying cultural issues – as early as you can in the process – will make success far more likely.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.