Once the Deal is Done, What’s Your Plan To Drive Synergies and Generate Sustainable Shareholder Value?
10 Questions for inbound U.S. investors
Question 10 - Once the deal is done, what’s your plan to drive synergies and generate sustainable shareholder value?
Getting to a signed purchase agreement is only half the battle—and 20 percent of the work. The other half (and 80 percent of the work) is realizing the value from the transaction through smooth execution.
The history of M&A shows the majority of value creation or destruction happens after the deal is signed. Simply getting to close isn’t enough. Day One and every day that follows should provide benefits that reflect the reasons you opted for the transaction in the first place.
A worthwhile transaction requires the development and execution of an overall integration strategy that has support from the entire leadership team coupled with effective governance and a dedicated integration team.
One of the integration team’s first priorities is to promote business continuity through a credible, detailed plan that results in a smooth close on Day One and a speedy path to value capture through a thoughtful post-close, 100-day plan.
Driving a deal effectively to value creation means identifying the required sequence of activities and milestones, then lining up the tools that will help you achieve them. A Day One plan is part of that solution, but so is a much broader program to reduce risk, capture value, and provide visibility to internal and external stakeholders.
Questions behind the questions
- Who will lead the integration planning effort? Will you use two-in-the-box leadership? What governance will you follow? What incentives will be put into place?
- How will you track synergies post-close? Will you bake them into budgets or account separately?How will you distinguish cost synergies from growth and both from on-going operations?
- What investments are required to complete the integration? How will you prioritize them?
- What messages do you need to communicate to shareholders or board members about goals and progress? How is that message different for employees? Customers?
- How are you managing risk? How is the enterprise considering U.S. regulations and reporting requirements at the federal, state, and local levels?
Do it now
Draft the presentation you’ll give to shareholders, customers, and employees at the end of the first quarter after closing that outlines Day One achievement of goals, growth and synergy plans, and the year one roadmap. Prepare a similar story projecting a year ahead for the first anniversary post-close.
Committing to a U.S. investment is complex, but in retrospect, it may be the easy part. Following through on that commitment in a way that generates synergy can be difficult.
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