You’re through the whirlwind of target selection, due diligence (DD), negotiations and deal announcement. Now what? Most Corporates and PE firms move quickly into planning and executing the logistics of the transaction and miss the enormous opportunity that lies in the pre-close window.
Are you gaining a head start before you have the keys…?
You CAN get a closer look under the bonnet, begin nurturing the interior, filling the tank and gaining critical information for planning the road trip
All too often we hear of Day 1 surprises: with keys in hand, acquirers get the first real view under the bonnet of the prized purchase and a sense of how the newly acquired passengers are reacting to the change of driver. Sometimes it delights, often it’s a stark reality of unforeseen challenges, a scramble to adjust transition plans, manage SLT expectations and build the confidence and commitment of a potentially concerned, bruised and blind-sided leadership and workforce.
Now imagine the benefits you could achieve…
You have already engaged with the leadership and workforce.
You understand their perspectives, concerns, what they are excited about, how they perceive their new owner.
You have built on DD by gaining vital insights into the opportunities, strengths, risks and frustrations. You can see the traps and trapped value in the business.
You have critical information to build a robust “first 100 day” plan, transition roadmap and to plan for day 1 readiness.
You have made people feel valued, begun establishing the trust and commitment of the leadership and workforce, reduced the risk of losing key talent and people are eager to assist with a smooth transition.
So, how can you loan the keys and open the doors before you have the ownership papers? A case study…
Engaging with a business pre-close is both a privilege and a delicate process. It needs to be carefully planned, resourced, communicated and managed – this is critical to ensure you are building trust, not fear and revealing the most valuable information.
Recently I had the privilege of conducting a “pre-close business insights and engagement” assignment to support an M&A/JV of a large, operational mine, between 2 major mining companies based in Australia and The Americas.
The owners and Leadership of the target company needed to feel comfortable, see the benefit and understand how it would be perceived. Would people feel threatened? Would they feel they were being judged or assessed? Would they believe their future would depend on how they answered? Would they feel safe to open up and share their thoughts? Who would conduct the interview and how? How would people react? What are the benefits? And of course, underlying these questions was “how will the insights reflect on the owners and Leadership of the target company”?
All these questions were genuine, valid and had to be carefully understood and managed to gain commitment to the initiative, the process, and for success. A trial interview was conducted with the Mine Manager. He instantly saw the benefits and the respectful and sensitive way that the interview was introduced and conducted.
He immediately agreed to the proposal and set the wheels in motion. 35 interviews were conducted with a cross section of representatives throughout the business over 6 consecutive days.
The benefits were tangible, palpable and bankable
The interview process uncovered vital information, critical for planning a successful future:
- the perception of the new employer, hopes and concerns for the future, and beliefs regarding the likely success of the M&A/JV;
- a shortage of resources had caused significant concerns and frustrations regarding missed opportunities and potential OH&S risks;
- an understanding of the organisational structure, cross functional co-operation, how decisions were made and how things got done (the culture);
- a workforce with a huge sense of pride in their achievements and “please don’t change these key things that work, are unique and bind the workforce together”;
- an inaccurate, fast spreading rumour which was causing great concern and disruption
- the importance of the land, ceremony and traditions of the indigenous community
Real time, rapid insights were provided to the Integration Lead at the end of each interview day. Priority findings and themes that required immediate attention, either to address a critical issue or misunderstanding, or leverage an immediate opportunity, were highlighted for rapid action or making crucial adjustments to day 1-100 transition plans.
A final report presented vital insights including immediate priorities and quick win opportunities, recommendations for short and long term actions and a proposal for communicating findings with the participants, Executives and broader organisation.
The good will, positive relationships and trust that was achieved was powerful and abundant
People reported feeling cared for, relieved and excited that their new employer wanted to hear their views. Fear was replaced with excitement, hope and openness. The word on the street was “When do I get to talk to Aussie Wendy?”
The client (acquirer) was thrilled – the benefits extended beyond what they imagined. Staff were welcoming their presence on site, raving about the “care”, rather than responding to their presence with guarded caution. The site was buzzing with news of the new employer. The foundations had been cemented for a great relationship – the keys were in the ignition, the car packed, fuelled and primed for an exciting road trip.
An overwhelming unintended benefit…At the same time, the to-be employer (acquirer) was in the process of individually negotiating employment contracts with each employee. The union, seeing an opportunity with the potential uncertainty of a change of employer, were lobbying employees to unionise the workforce into a collective agreement. An enormous percentage of employees signed the individual employment contracts with the new employer on the spot, or within a few days and long before the window for signing had expired, reporting that they were eager to work for a new employer who had shown so much care and respect for them even before they owned the company.
Could your next M&A value from these insights and relationships? Engaging a skilled and independent deal specialist is key to success.