Each acquisition and integration is unique and has its own set of complexities and challenges. Mistakes will be made along the way, up-front assumptions will turn out to be inaccurate, and cultures and roles will inevitably clash. We all know the old saying, “Hindsight is 20-20.” When it comes to an acquisition and integration effort, a look back can provide great insight into what went well, what didn’t go well, and what should be done differently the next time.
For organizations that intend to remain active in acquisitions, a hindsight look before the acquisition is completed can be extremely beneficial. The effort needn’t be long-term; but for it to be efficient and effective, it should be structured, focused and well-organized. When we ask our clients to look retrospectively at an acquisition, we typically take the following approach:
A critical outcome from this process should be to answer this ultimate question: “Did this acquisition make sense?” Answering this question at some level should be considered part of post-integration “business as usual” and does not need to be a complex, time-consuming effort—it could be as simple as comparing the financials on the first anniversary of the integration. At the functional level, work volumes, expense savings and revenue projections can be tracked by functional area so that impacts can be reported. The key is having a process and plan in place to track the short-term and long-term financial effects of the acquisition and then be able to tie everything back to the pre-acquisition business case.
On a smaller scale, system conversions or implementations provide a great example of this. Once the system is in place and the organization gets back to business as usual, there is a tendency to lose sight of whether the projected financial benefits or ROI are actually realized. The same often holds true for acquisitions. It is surprising that acquiring organizations are often unable to confidently answer the ultimate hindsight question because there is no process to measure or monitor the results.
A well-executed hindsight review can be a significant driver of future acquisition success and should be included in the latter stages of any integration plan.
Mike Meyer is a senior consultant at The Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.
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