M&A integrations are complex and require specific roles. The difference between Integration Leader and Integration Management Office is fundamental to understand.
The role of an M&A Integration leadership is a multi-faceted and multi-disciplinary role. The Integration leader should create a vision for acquisition, plan for cultural integration, create a go-to-strategy for new markets, realize value synergies, ensure consolidation and integration, manage the integration program, engage with executive stakeholders, and instate project management discipline. Of course, not to forget being answerable to the board of the company, coach teams, mentor high potentials, ensure transparency, demonstrate leadership to lead a business and be highly strategic and influential.
When you see the list of expectations, even Superman would have to review his CV and see if he qualifies for the job.
As you can see that it is quite unlikely for a single human being to have all the required qualities. Not just that, there are certain characteristics required that are two extremes of a spectrum – need to be able to influence and yet control, be strategic and yet can’t miss the tactical details, need to be assertive and yet demonstrate cultural neutrality.
So, how should an organization structure a team to lead an M&A Integration?
While there are various obligations that must be fulfilled for an integration that needs multiple roles for the leadership team, there are two prominent roles in an M&A integration. Based on the requirements of an M&A and diverse personality traits, it is advisable that every integration must have these two roles: M&A Integration Leader and Integration Management Office (IMO) Leader.
So, how should an organization structure a team to lead an M&A Integration?
It is primarily based on the opposing needs of a lead-&-influence role vs command-&- control role.
An M&A Integration leader is expected to fulfil the lead-&-influence role whereas an IMO leader role is expected to exercise command-&-control.
Some people may think that these roles may end up working at cross-purposes and that is why, it is important to clearly demarcate the requirements and scope of tasks for each of the role.
Let us delve into the details of the activities that are covered by each role. Keep in mind that these are complimentary roles and must not be viewed through a hierarchy lens, but it is more appropriate to consider them as part of a single Tag-team.
Here is an overview of an integration leader.
LEAD AND INFLUENCE
- Unlike the belief that integration is an exercise of going through checklists and ticking the boxes, integrations include setting up new target operating models, organization restructuring, change of roles, cultural reorientation and alignment to new sets of goals and objectives. Thus, it needs a lot of discussions, influencing others, negotiations, and cajoling stakeholders.
FACE OF THE INTEGRATION
- By default, an integration leader often become synonymous to an M&A integration. A success, a failure, hurdles, news, challenges and victories, all of them are associated with the integration leader. When an integration is going well, people buck you up. When things go wrong, people start scrutinizing every single aspect of an integration leader. Their background, their stories, amplification of past failures and even their personality get questioned.
- Laying out the vision for the combined or absorbed organization, setting up new goals and objectives, operating plans, revenue targets, financial forecasts become part of the responsibility of an integration leader. In some cases, there are business and other operational leaders who get assigned these targets and goals, the responsibility of creating and curating these elements is still largely with the integration leader.
- Conceptualizing a Target Operating Model (TOM), analyzing the target and integration, defining integration end-state, socializing and alignment of future-state with stakeholders, leadership team, middle managers and eventually with front-line employees.
TRANSFORMATIONAL CHANGE LEADER
- Engaging Executive stakeholders from both companies, establishing and leading Integration Steering Committee, shareholders, company boards as well as leading the transformational change throughout the organization. This would include structural and operational change, employee transition and leading communications (communication details are handled by the IMO).
- Leading the integration program, ensuring synchronization, mobilization and discipline amongst various members who are involved in an integration.
- Planning and defining deliverables for:
Pre-closing days including preparing for Day-1 announcements, communication, reviewing contracts.
Day-1 critical activities including change of ownership, fund transfers, informing customers, suppliers, partners, and media.
100-days goals and objectives.
100+ days tasks, activities and initiatives.
- Providing directions and guidance to the work stream leads, ensuring that each workstream is adequately setup and has the right working team, set the goals and scope of their integration activities.
- Managing interdependent and cross-functional activities in an integration.
- Team alignment, escalation and conflict resolution that may require executive intervention.
REVENUE GENERATION AND VALUE SYNERGIES CREATION:
- Collaborating and setting Go-to-Market strategies for revenue generation and extracting revenue synergy generation through up-selling and cross- selling of products and services.
- Setting schedule for the realization of cost synergies including procurement consolidation, organization restructuring, roof-top consolidation and economies of scale.
- Ring-fence the revenue generation run rates for both the acquiring and the acquired companies.
- Creating an integrated, combined or an adopted identity, new branding, marketing, and communicating with media.
- Cultural integration of organization, leadership and people with a clear purpose, vision, goals and objectives.
- Values, rituals and operational rigor.
- Operational governance and management.
- Ushering in new and modified policies, employee hands, rewards and retribution mechanism, creating awareness amongst teams about changes, performance management and appraisals.
- Key talent retention, creating and sharing career development opportunities for acquired company employees, creating opportunities for growth, training and special focus on front-line and middle management enabling initiatives.
- Development and integration of acquired company leadership team.
- Future workforce and talent planning, capability management through internal, external, contingent, outsourcing, 3rd party service providers and strategic alliances.
The IMO Leader on the other side has the following int heir scope of activities.
COMMAND AND CONTROL
- IMO Leader has the role of ensuring compliance to the requirements of the M&A integration. Thus, it sets the integration principles, guidelines, deliverable characterization, sets the acceptance criteria, provides a governance structure and an operating rigor for the integration, and closely monitors and controls the adherence to these measurements.
SUPPORT INTEGRATION LEAD
- IMO Leader is a complementary role to the integration leader role and is often seen as an extension of it. IMO leader ensures adherence, compliance, monitoring, transparency, and alignment of the integration members to support the integration leader.
- IMO processes to support Integration Lead and Steering Committee.
- Manage synergy tracking and measure revenue opportunities.
INTEGRATION GOVERNANCE AND COMPLIANCE FRAMEWORK
- Set up integration programme structure and governance. This includes setting up the integration calendar, resource availability and vacations calendar, weekly rigour, performance indicators and reporting mechanism.
- IMO team helps in preparing progress reports, leadership presentations, and other update communications.
TOOLS AND TEMPLATES
- Project charters, project plans, Gantt charts, resource planning.
- Project documentation, document repository, knowledge management. Specific tools, document templates, progress reporting templates.
- Risk and issue registers.
- Tools, templates, checklists and plans from previous M&A integration and other best practice sources.
- In and Out of Scope framework.
- Communication schedule.
- And others.
INTEGRATION BUDGET MANAGEMENT
- Managing and monitoring all financial related items including expense management, redundancy costs, facilities costs, project costs, communication, and other costs.
- Reporting on financials on a period basis.
- Escalating exceptional items early.
- Ensuring expense compliance and approvals.
- Delegation of Authority.
- Charge and recharge allocation approvals.
- Creating integration tactical steps (project tasks, communication, synergies and implementation plan).
- Creating and monitoring a central overview of all the tasks and activities related to an integration including workstreams and other cross-functional activities.
- Create cross-functional work stream charters to coordinate integration activity across functions.
- Resource and budget allocation.
- Reporting project update and progress.
- Workstream and other deliverables gatekeeper.
- Lead reporting processes, from functional work streams to IMO and up to Steering Committee.
- Plan, create and manage communication schedule.
- Company announcement and other employee communication. Communication with vendors, suppliers, strategic partners, customers and others.
- Coordinate with internal communication teams for external and media communications.
As you can see, this is just an overview of the split of responsibilities between an integration leader and an IMO leader. In this overview, it is quite obvious that these two roles need to work closely together, and yet need very different and sometimes opposite skill sets. One is more focused in creating trust and alignment whereas the other provides a disciplined and a structured framework for people to work with.
Many organizations including seasoned acquirers tend to overlook this difference in skillsets and end up appointing a single person for both the roles especially for some of the smaller acquisitions.
Guess what happens then?
Conflicted integration leaders!
And for smaller acquisitions, it essentially means that an IMO leader is appointed to absorb the company and ticking the boxes without any forming-storming- norming-performing activities related to vision, mission, purpose, and aligning goals and objectives.
Companies spend millions of dollars on the acquisition process. But why do they end up short-changing the role into two, is beyond me.
Maybe this article will help at least some organizations to take notice and change.
It is edited and keyword optimized by Blanca Monni.