Volume 9, Issue 7, April 5, 2022
At VERTESS, we often get a first-hand look at the good, the bad, and the ugly of post-transaction integration. No two healthcare deals are transacted the same, and no two deals will ever integrate the same. The simple truth is integration is just as much a process as completing a merger or acquisition — and likely a lengthier one as well.
Since every deal is different and sensitive, buyers must go headfirst into their integration strategy keeping these in mind. What has worked for some deals in the past may not for deals in the future. However, outlining the overall integration objectives and starting with a clear timeline for integration from day one will better ensure the right strategy is drafted and executed successfully.
To put it frankly, integrating two organizations is no easy process. A sophisticated buyer will have benchmarked successes from prior acquisitions. This will alleviate some of the more daunting integration steps and projects, but even these veteran buyers will tell you it can be a challenge to complete all the various moving parts of an integration without at least some disruption.
A widely accepted good first step and best practice for post-transaction integration is to develop a defined, 100-day plan that includes key objectives to achieve along the way. To help you build this plan, here are four of the essential integration areas you will want to consider along the way.
This is often the biggest hurdle in integration, and much of that is due to the timing it takes to integrate, train, transition, and adopt new technologies and IT protocols. Switching from one software platform to another might sound painless in theory, but it can be quite difficult. When organizations and employees have been using and reliant upon specific software tools for years, learning and adopting new ones can be challenging for staff. It is vital for the integration team to provide plenty of training and guidance after selecting technologies to implement.
In addition, it's important to remember that technology/IT infrastructure often involves reliance on third-party vendors, so it is important to engage these vendors in discussions concerning processes and implementation timelines. Failure to do so can cause unforeseen delays in your integration timeline.
Resolve any people issues quickly. For example, we recently transacted a small healthcare business with a much larger entity. One of the key staff members at the smaller business left shortly after the transaction closed because they "didn't want to work for a big firm." Developments like this happen quite often. Time announcements about matters such as recruitment, organizational changes, and leadership development accordingly. Fill management gaps first to help ease staff worries and avoid disruption in business.
Do not try to rebuild or create a new culture. If you must do either, then it is likely not the ideal acquisition for either organization. Instead, ensure that culture from both organizations complement one another enough that you can complete a deal in the first place and then successfully build a single "whole" company together.
Employee appreciation matters. Ensuring core values will remain an integral part of your business strategy will provide a more secure environment.
Be honest and upfront with those who will be affected by the transaction and integration. If you're the acquirer, include leadership from your new company in decisions about matters such as promotions, hires, and departmental changes. Share with the new leaders and staff what may change over time and what might change immediately.
It's an uneasy feeling for many people when acquisitions occur, and rightfully so. Will they worry about losing their job or making less money? Will benefits stay the same, worsen, or, better yet, improve? What will it feel like working for a larger business? What will it feel like working with new coworkers? What we have seen is the more transparent and open an acquirer is from the start of integration, the more willing the staff are to be engaged in and accepting of the upcoming changes and tasks.
The ideal scenario is to start integration as soon as the deal is announced to both organizations. Every working minute matters to make sure the process is completed timely and with minimal to no hiccups. Let decision-makers make decisions quickly. Avoid practices that add little value and may only serve to slow down and stifle progress. Look for opportunities to improve efficiency and streamline processes. It's all hands on deck for integration, from senior management to staff. Essentially everyone in an organization is going to play a part in integration at some point during the post-transaction process. Integration is truly a team effort.
Track progress, report quickly, and prepare for hurdles. Just as obstacles may temporarily delay an M&A transaction, they are normal in integration periods and part of the journey of reaching the post-transaction finish line. Do not rush through integration as that will only hurt both organizations down the road in ways that could include financial repercussions. Consider rolling your integration strategy out in phases as this will help avoid overwhelming your team. Use simple, user-friendly project management tools so everyone involved is on the same page.
Finally, execute hard and fast but be patient with the process. In the end, you'll be glad you took the time necessary to properly achieve integration.
Rob has an extensive background in Public Relations and Marketing for various companies and clients in a number of industries including, healthcare, finance, and technology. He has led PR and communication campaigns with national brands and helped launch several startups in the Dallas/Fort Worth region. As a Managing Director of VERTESS, he is passionate about advising healthcare business owners through a successful transaction as they transition their business to its next owner. Prior to joining VERTESS, Rob helped operate a non-profit business incubator for entrepreneurs and small business owners in Fort Worth, Texas.