Merge Well—How to Integrate an Acquisition

By: Jason Frankel  |  November 6, 2018

After a merger, integrating companies requires high levels of coordination from across the newly formed organization. Though integration is the final step in the M&A process, it can also be the most complex, involving leadership, operations, finance and change-management. Companies that manage to integrate smoothly will achieve their goals, whether that’s scale, strategic synergies or accelerated growth, with the least amount of distraction to the core business.

This April, Mainsail’s portfolio company, GTreasury, acquired Visual Risk, a treasury and risk management system based in Sydney, Australia. Mainsail’s Vice President Jason Frankel was at the helm of this merger, serving as Chief of Staff at GTreasury. In the process of doubling the company’s headcount and fusing two organizations on different continents, Jason identified a number of critical success factors that can be applied to most integrations following an acquisition:

Appoint an Integration Task Force

Acquisitions can create massive distractions from day-to-day workflow. To avoid that pitfall, assign specific people to lead the charge through the transition. Build a team that can align the strategy of the deal with the nitty-gritty applications of the acquisition, including the changes and emotions that will inevitably arise. Ideally this group is limited to 3-5 people from across several functions to limit the distraction factor and keep decision-making streamlined.  Assign this group before the deal has been signed, so they can prepare and create capacity by delegating some of their day-to-day responsibilities.

Build a team that can align the strategy of the deal with the nitty-gritty applications of the acquisition.

Don’t Do Anything Without a Strong Finance Team

Before considering any acquisition, make the early investment in your finance team. It will save you time and money in the long run and provide the necessary skills to financially integrate the two companies.

At GTreasury, we recruited Brent Coles as our CFO a few months prior to the acquisition of Visual Risk. We also hired a U.S. Controller, FP&A Manager and an APAC Controller (hired shortly after close). While this represented a large investment in the team, the company has already seen significant returns on that investment as it quickly transformed into a financially savvy, data-driven organization.

Know Where You’re Going

At the outset, ask yourself: what is the objective of this acquisition? To boost market share? To bring in new products, services or intellectual property? Are we trying to vertically integrate, break into a new market or eliminate a competitor? Define the key objectives for your acquisition before your two companies blend into one. In addition, determine two to three goals to focus on immediately following the acquisition.

Merge Well – How to Integrate an Acquisition

With Visual Risk, our key objectives were to 1) acquire a leading treasury risk management platform in the market and 2) acquire a strong team that we would otherwise have to hire ourselves.  Following the acquisition, our focus areas have been to integrate the products and teams. Understand that you will not be able to do everything on your integration checklist at once, so prioritize two or three initial measures of success.

Blend Cultures with Care

In a merger, you’re not just blending companies—you’re blending cultures, each of which is engrained in and valued by its team. If not handled with care, cultural integration can lead to frustration, diminished output and disloyalty. That’s why it’s essential to prioritize people and their experience during an acquisition.

It’s essential to prioritize people and their experience during an acquisition.

When Chicago-based GTreasury acquired Sydney-based Visual Risk, two immediate cultural challenges sprang to the surface: the 8,000-mile separation and the fact that company headcount doubled in a single day, growing from about 80 to over 150 people. Though it remained a “small business,” this infusion of personalities had the potential to create wrinkles in what previously felt like a smooth operation. With the help of Shelley Wyka, GTreasury’s VP of People, the newly combined company built a Global Culture Committee to help the two organizations stay tightly connected.

Communicate—and Then Communicate Some More

Mergers and acquisitions can be disruptive to the company and create anxiety for employees. People will wonder: What does this acquisition mean to me? Will my day-to-day responsibilities change? Why did we acquire this company?

The only way to mitigate these concerns (and ensure integration success!) is to over communicate to your teams. Never assume your message is clear; rather, ensure it’s clear by remaining open and communicative.

Integrating two companies can be incredibly complicated and fraught with potential pitfalls.  Increase your chances of a successful acquisition by putting the right team in place, being clear on objectives and communicating relentlessly throughout the process.

Jason is a Vice President at Mainsail Partners and is responsible for sourcing, executing, and managing new investments. His area of focus is vertical software applications.
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