Communication, integration key for deal success

A gathering of private equity investors, lenders and advisors in the Windy City heard views from industry practitioners on making the deal process run smoothly.

Mid-market financial professionals may have left the Alliance for Merger & Acquisition Advisors’ Chicago conference a little wiser on executing and completing deals. Avoiding pitfalls in both the diligence phase and the post-merger integration process are keys to a successful deal, speakers at the conference said.

The diligence phase can be weighed down by countless emails, both internally among the purchaser and target, as well as externally between those two parties, Davide Belew, director of member services at AM&AA, said.

Rather than conducting all the diligence via email, it would be more efficient for the diligence process (and easier on the Outlook inboxes) if the transaction were to open three Dropbox-esque virtual data rooms – one on the buy side, a second on the sell side and a third one where the two parties trade updates on diligence tasks. 

One effect of this, Belew said, would be giving key diligence figures, such as analysts, more time to focus on actually analysing rather than responding to emails or other administrative tasks.

Belew also highlighted the importance of tying the diligence process to the deal rationale, the reason for either making the acquisition or selling the company or key assets. The diligence process affects integration, he added.

Arun Kochar and Oleg Kozyrenko, both principals at A.T. Kearney, said the key to a successful integration of two companies was identifying where operations could be aligned. 

When looking for areas to streamline business, it is important to consider the timetable for execution of that combination as well as the extent of the integration, the men explained. Easier integrations could include supply chain management and general and administrative procedures whereas more complex areas could include in-house research and development.