Comments on: Finding the Hidden Treasure of Cost Related Synergies

By: Gregg Davey

Gregg Davey — Sun, 14 Jun 2009 00:30:47 +0000

I wanted to point out a very important merger strategy dynamic in regards to your point about, “Plan the integration activity in detail ahead of the announcement.” Not only does the planning need to take place during the due diligence, but it is critical to establish a “jointly managed” M&A Transition Program Office (TPO). Without establishing a central point to organize, track, and oversee post merger activity, comprised of accountable leadership from “both” of the merging organizations, the effort is subject to chaos as cultures clash. Furthermore, if executives from the acquiring organization are placed solely in charge, it has an adverse effect on the entire effort because of the demoralizing impact it has on the acquired company’s associates. This is compounded by the lack of critical institutional or market specific knowledge that would be brought to the table if the acquired company’s executives had a vested interest in the success of the transaction. Ideally, that interest would extend to a positive post merger valuation as well, but I digress. Having a jointly led TPO may seem like a trivial element, but it is critical to the merger’s success!

By: Isaac Deutscher

Isaac Deutscher — Thu, 11 Jun 2009 17:52:57 +0000

Planning the integration activity prior to the deal is the most important point you made. If you don’t have a realistic straw-man of how long it will take to compete the post-merger integration, during the pre-merger, there is no way of knowing when synergies will be realized.

By: Ezra Ettinghausen

Ezra Ettinghausen — Thu, 11 Jun 2009 17:30:12 +0000

This may be a good framework for achieving the desired synergies, but you need to start by looking at the combination of the companies holistically. The first question that should be asked is, “what would it cost to run a combined entity?” How you slice and dice the company to achieve synergies can be answered later, perhaps using the model above. The one very important part that is hit on here is that you need to make these determinations during the due diligence process. Anyone signing up to perform an M&A transaction without answering this question during the due diligence phase is bound to experience merger issues that will sink the deal.

By: Aaron Weisman

Aaron Weisman — Wed, 10 Jun 2009 19:23:22 +0000

This posting really portrays the depth of expertise required to pull of a M&A or divestiture restructuring. You can see why so many organizations have post merger issues or blow their TSA commitments during divestitures and spin offs.

By: Due Dillgince

Due Dillgince — Wed, 03 Jun 2009 14:28:19 +0000

This is a good overview of the mindset needed to pull off a successful execution during the post merger phase, and if embraced it will certainly help to avoid merger issues that so often plague transactions. The one critical point I have to make is that it looks like the posting is geared toward the attitude a C-level executive must take, but then discusses due diligence (as an example), which so often don’t actually involve the C-level executives, but are performed by M&A analysts or accountants. C-level executives need to lead through policy and the post needs to go deeper into the “policies” a C-level executive should implement to ensure the sprit of the points are embraced by the M&A analysts working the deal and making decisions. Anyway, it’s good advice for anyone running or involved in a merger acquisition or divestiture….Bravo!