7 tips for successful M&A integrations

In today’s world of working virtually and remotely, the dynamics of how mergers and acquisitions (M&A) integration teams work has shape-shifted from an in-person command center style operation to a far-flung effort that relies on technology to connect people, share and track information and collaborate. While the actual work has remained largely the same, the team environment has changed dramatically and needs to be managed differently.

Here are seven tips meant to help navigate the changing dynamics of teamwork and culture during the integration phase of a transaction that will keep the broader team focused, engaged and responsive.

1. Communicate the transaction objectives and guiding principles early

As the circle of executives, employees and advisers in the integration team is expanded to a number of operational and administrative functions, workstream leaders and line managers will raise a series of questions that need to be answered sooner than later. It is important to establish common goals and guiding principles early. Guiding principles should convey the transaction thesis and strategic goals for doing the transaction — the why — to prioritize Day One critical items, strategic interests and team cooperation. The alternative is to allow individuals and disparate cohorts to fill in the knowledge gap as they may. Communicating and reinforcing strategic objectives and guiding principles early and often will create clarity of purpose, alignment of efforts and ease of mind.

2. Establish a strong governance process at the outset

Most health system executives are familiar with the concepts of an executive steering committee (ESC) and program management structure. These need to be established early and be inclusive of all transition workstreams and involve buyer, seller and acquisition target personnel to effectively work on separation, integration and transition service agreement management. It is important to define the scope of the workstreams early through charters that provide clarity to the workstream members. The scope and workplans should be vetted within and among workstreams to document interdependencies and create a broader understanding of the work being performed. Disseminating this knowledge across the scores of professionals working on the transition will improve performance.

Similarly, the ESC needs to act as a governing body and cannot exist as a passive committee loosely monitoring updates. The ESC and governance structure need to establish clear lines of accountability for achieving implementation plans and requesting and adhering to transition funding requests. As risks and issues threaten to cause delays, the ESC needs to assign responsibility and resources for mitigation plans and closely follow progress of critical path items. To that end, it is best practice for ESC members to participate in the updates presented by their subordinates to foster involvement and buy-in.

3. Articulate and disseminate the operating model

 People at all levels who will be joining from the acquired or merged entity will want to know how they fit into the organization structure and how day-to-day work will continue forward or change. Leaders and employees who need to integrate services with or provide services to the newly added entity will have similar questions. And it is natural for people to want to know who their boss will be. Communicating the operating model early will prevent confusion and decrease anxiety. It will be natural for the operating model to develop and improve with iteration. It is best practice to communicate a working plan early and communicate updates with transparency and repetition to support change management.

4. Make the integration plan aggressive

Don’t fall into Mark Twain’s trap of “putting off until tomorrow what can be put off until the day after tomorrow.” An aggressive plan and strong governance structure will organize people around clear objectives and establish momentum while the purpose of the transaction is fresh in everyone’s mind. When acquiring a hospital that is being carved out of another health system, the transition service agreement deadline will drive urgency. When acquiring a stand-alone entity via a member substitution transaction, the deadlines are less pressing. Don’t fall into the “not urgent” trap. Once momentum is lost, it is difficult to restore it.

5. Encourage in-person meetings to build team dynamics and iron out design and planning

The power of in-person meetings should not be underestimated. They can be powerful tools to create a sense of team, build one-on-one relationships among remote team members and bring about an inspirational environment to think creatively. Conducting monthly in-person meetings, if possible, can set the right balance for building in-person chemistry and maintaining remote-work efficiency.

6. Emphasize employee retention and appreciation

As part of any transaction, there are critical executives and managers whose departure could spell disaster for meeting tight deadlines, complying with regulations or simply maintaining continuity during critical periods. It is important to identify these key resources early, speak to them individually, and offer retention bonuses and other incentives to secure their tenure. It is also important to communicate with broader cohorts of employees and stakeholders deemed essential to operations. People are part of the transaction equation, so it is important to invest wisely to keep them.

People respond to positive reinforcement, so it is also essential to actively show appreciation for M&A transition efforts throughout the process. For most people involved, this work is being performed on top of their day jobs. Just as it is necessary to establish accountability in meetings — whether in-person or remote — it is equally important to encourage good work by recognizing it. Make this part of the work cadence. Call out individuals for specific examples of good work on team calls and also when meeting in person: After all, “appreciation is the oil that keeps the engine running smoothly,” as one Grant Thornton client likes to say.

7. Recognize the value of culture

It has become common knowledge that culture can do as much harm in M&A as a bad balance sheet. But it can also serve as an enterprise-sustaining asset if nurtured and developed correctly. It is important to learn early — best practice would be during due diligence — how the cultures of the two organizations are compatible and different, and use that knowledge to organize the work, facilitate meetings and deliberately and proactively establish new norms.

Summary

How you engage, organize and treat people during the urgency of M&A transitions is as important as the deal structure, the asset being acquired and the market position you hope to achieve. 

About the author: Stephen Thome is a health care transaction principle with Grant Thornton who assists health systems across the M&A life cycle.

About Grant Thornton

Our clients take advantage of our collective knowledge, gained from long experience in and with healthcare organizations. More than 400 Grant Thornton healthcare professionals deliver solutions focused on growth, transformation, and protecting core assets.

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