Due Diligence and Integration

How to use due diligence and integration effectively to maximize your opportunity for success.

Q: How often are you able to bring together both buyer and seller functional personnel during due diligence? Some sellers might be sensitive to confidentiality and not open to bringing their personnel into the fold. A: When conducting due diligence, we advocate a functional approach, where leaders from the buyer’s organization meet with the seller’s. There […]

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Cultural due diligence is a critical task in the acquisition process. It exposes hidden problems and risks, but also may identify opportunities. However, if you do uncover red flags, you may need to reevaluate the deal. Sometimes you must simply call it off.  We have walked away from a transaction when due diligence revealed a […]

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Effective leadership plays a critical role in integrating companies following an acquisition. Challenges abound, for instance when disagreements arise between the executive team and the rest of the staff. How do you bridge the gap? Communicate painful decisions? Maintain calm during a period of change? As the leader of an integration process, you should: Be […]

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Culture can often be neglected simply because it is difficult to measure, especially when compared to hard facts such as number of employees or company revenue. After all, what constitutes a “good” culture? Definitions may vary from company to company and even among members of your own acquisition team. Despite this challenge, company culture should […]

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Culture clashes can make or break a deal. Just think about a few infamous deals that fell apart, such as the Time Warner-AOL merger in 2001. In Deals from Hell, Robert Bruner analyzes the reasons for failure in depth along, including examples of deals that failed due to cultural issues. In fact, cultural issues are […]

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It seems as though the employee vs. contractor issue is popping up all over the news. Virtual assistant startup company Zirtual just fired over 400 employees by email because the company couldn’t sustain its payroll once it converted contractors to employees. The Wall Street Journal has also highlighted the many startups that are now grappling […]

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Q: “What if the buyer and seller functional leaders do not match? How do you coordinate the two sides?” We take a functional approach to due diligence where we encourage your leaders from sales, marketing, finance, operations and other functional areas to meet with their respective leaders on the seller’s side. A functional approach ensures […]

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People are critical to the success of your company, and it’s no different in the business you are acquiring. But how can you go beyond the surface and find out what employees really think? It is doubtful employees will be completely open and honest when asked point blank, “Do you like your job?” One of […]

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There are many different ways to handle brand integration – whether it means discarding the target’s brand in favor of your own, keeping both brands, or creating a new one. Each strategy is valid, depending on your brand equity and strategic rationale for acquisition. Let’s look at a live example: In its $2.5 billion stock-for-stock […]

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Once you’ve closed the deal on a new acquisition, what do you do about the brand? Keep it as it is? Replace it with your brand? Create a hybrid? Something else…? The brand is one of the assets you acquire when you buy a company. It may be worth a lot. Or little. Or nothing. […]

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When it comes to integration, people often think equity ownership should determine their approach. If they own 100% of the business, they should change all the target’s practices to their own.  In a strategic alliance where neither side can force the other side to do anything, they might not integrate any of the practices. But […]

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The closing of a deal is the fruition of months — even years — of hard work. But closing is just the beginning of integrating a newly formed company. Combining companies is a major operation that requires skill, diligence and patience.  In fact, CEOs and executives often cite integration as one of the most challenging […]

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You can increase your chances for successful acquisition by using functional due diligence to evaluate a prospect. This means actively involving leaders of the key functions of your organization: functional leaders from sales and marketing, finance, operations, IT, etc. There are several benefits to involving functional leaders in the due diligence process.  Each leader has […]

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Integration is key area of concern for many involved in mergers and acquisitions. According to a survey by Deloitte, 37% of directors and 43% of CFOs named post-deal integration as their top concern. About 47% of executives believe “people problems” in M&A are more prominent now than 12 months ago. So how can we overcome […]

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In 2013, we saw interesting mergers & acquisitions across multiple industries, ranging from hot tech deals like Yahoo’s $1.1 billion acquisition of Tumblr to the rescue of favorite food brand Twinkies from bankruptcy by Metropolous & Co. and Apollo Global Management. While the potential synergies of the two companies are always laid out, not much is said […]

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Cultural alignment while integrating two companies is a hot topic in the M&A world.  For instance, CFO.com recently quoted Jonathan Chadwick as saying, “The number-one reason I think deals fail is because there was not an agreement or a matching of cultures.” Should you have any doubts, read about Kidder-Peabody inside of GE. Those cultures […]

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When I am teaching M&A, I often use the phrase ‘‘from beginning to beginning.’’ I am signaling a difference from the more familiar phrase ‘‘from beginning to end,’’ which suggests that once the deal is signed, the process is over. In my experience, the end of an M&A transaction marks the beginning of a whole […]

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Join Capstone CEO David Braun as he leads a webinar on how to successfully plan and execute the integration of two companies. The closing of a deal is the fruition of months — even years — of hard work. With it, though, comes a whole new round of work that begins the moment the ink […]

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Don’t let a rocky integration spoil the fruits of a partnership that has been primed for success. Let Capstone help you understand how to plan and prepare for a happy marriage of two companies! David will speak for approximately one hour followed by a question-and-answer session. You’ll learn how to: -Explain the different levels of […]

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Beer consumption in the US is growing at 1-2% a year according to the National Brewing Association, I know I’m doing my job of contributing to this growth, but apparently many of you are not! In Brazil the growth rate is over 10%!  So no surprise that Kirin is acquiring a stake in Schincariol the […]

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