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Who doesn’t like to grow by acquisition, especially when growing organically can be a real challenge in certain markets. Growth strategies through acquisition have been around for a long time in the printing industry. Achieving success in an acquisition relies on the parties going into it with both eyes wide open. You’re not only dealing with the financial aspects of the transaction, but you’re dealing with people, customers, types of print that both companies produce, business rules, software and technology, accounting rules, egos and culture, commission plans, and a whole lot more. In advising companies over the years, I put together a few areas of focus that are often overlooked, or undervalued. If you can overcome these five myths, I like your chances for a successful integration of the newly acquired firm.
Synergy is guaranteed
One common myth is that combining two companies will automatically create synergy, resulting in a new entity that is more valuable than the sum of its parts. However, achieving synergy requires careful planning, integration, and often significant restructuring. It's not always easy to align cultures, processes, and strategies, and sometimes the expected synergies never materialize. One of your goals should be how can you make one plus one equal three when looking at an acquisition. Start the difficult conversations early – they often get put off or swept under the rug.
Cost savings are immediate
Another misconception is that merging companies will immediately enjoy cost savings. While there may be opportunities to streamline operations and reduce redundant expenses, realizing these savings often requires upfront investment in integration efforts, technology upgrades, and restructuring. In some cases, cost savings may take time to materialize, or they may be outweighed by integration expenses. Just like any other initiative, the areas you identify for cost savings should be carefully thought out. Create a timeline for implementation, and include a thorough understanding of the things that could go wrong should you make these changes, as well as how you would fix them should they occur.
Customers won't notice changes
Companies sometimes underestimate the impact of a merger on customers. Even if the merger is intended to be seamless from the customer's perspective, changes in branding, product offerings, or customer service processes can lead to confusion or dissatisfaction. Maintaining customer loyalty and trust requires careful communication and management of the transition. Unless there was a different driving force behind the combination, most times the goal is to capture the customer base and to grow it. Too often I see these deals three and four years down the road with little or no customer retention.
Talent retention is automatic
It's a myth to assume that all key employees will remain with the merged company. Mergers can create uncertainty and anxiety among staff, leading to talent attrition, especially if there are perceived conflicts in company cultures or values. Retaining top talent requires proactive efforts to address concerns, provide reassurance, and offer incentives for staying with the combined organization. Most printers tout the strength of their people as a key market differentiator, and rightly so. Don’t overlook the fact that these transactions will require time and attention to win the hearts and minds of the new team members.
Integration is a quick process
Finally, some believe that merging two companies can be accomplished swiftly and smoothly. However, integration is often a complex and time-consuming process that requires careful planning and execution across various functional areas, including finance, HR, IT, and operations. Rushing through integration can lead to errors, inefficiencies, and missed opportunities for realizing the full potential of the merger. Develop your integration plan and team as early in the process as you can. Their fixation with making this work will pay dividends and help the deal achieve its fullest potential.
Successfully navigating an acquisition requires more than just a financial transaction; it demands a strategic approach that dispels common myths and embraces the complexities of the deal. By addressing misconceptions about synergy, cost savings, customer impact, talent retention, and integration timelines, companies can better prepare for the realities of merging two companies to form a stronger new company. An acquisition can indeed be a powerful growth strategy, but only if approached with the understanding of the challenges and a commitment to thoughtful planning and execution. By focusing on these critical areas and maintaining open lines of communication, organizations can improve their chances of achieving a successful integration, ultimately turning potential pitfalls into opportunities for long-term growth and stability.
These are some ideas that I think are important, and that you should consider. But there is undoubtedly more to a successful integration – what’s working for you? What are some of the ways you’re guiding your team to capitalize on your recent acquisition? Please add your thoughts and comments below.
Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to owners and CEOs in the Graphic Communications Industry by providing direct and realistic advice, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at mphilie@philiegroup.com.
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Mike Philie leverages his 28 years of direct industry experience in sales, sales management and executive leadership to share what’s working for companies today and how to safely transform your business. Since 2007, he has been providing consulting services to privately held printing and mailing companies across North America.
Mike provides strategy and insight to owners and CEOs in the graphic communications industry by providing direct and realistic assessments, not being afraid to voice the unpopular opinion, and helping leaders navigate change through a common sense and practical approach.