What makes an acquisition integration an inteGREATion?

The first half of 2022 has seen significant economic and geopolitical headwinds which have so far failed to dampen deal activity: worldwide M&A activity surpassed $2 trillion with deal volumes up 35% and deal values rising 13% compared to the last M&A cycle according to EY data.

At Apex Group, we’ve made and successfully integrated over 30 acquisitions in the last five years, transforming our business and driving “hyper-growth” to over 10,000 employees in over 80 locations. This unique experience means that our team have practical insight into doing deals and unifying businesses. Every deal is different – but a smooth integration strategy and implementation model are essential to achieving a value additive transaction.

Here, we share some of our insights into the common pitfalls and challenges of the “integration game” and how your team can anticipate and overcome them.

1. Fail to prepare…

Many assume that integration processes begin only once the ink is dry, but for us, the process begins before the deal is done. For each of our 32 completed deals, we have developed a clear model prior to closing on how we would execute each integration, including detailed and documented project planning.

It is essential to have a dedicated resource, a team which can be supported by external consultants but that is 100% focused on integrating the acquired business. While you will need to include specialists from your business such as Heads of HR, Communications and Technology in the integration workstreams, it is a vital that you have a team in place who are laser focused on a successful integration outcome, and their time and attention will not be distracted by competing business demands.

2. Integration is a two-way street

Many integrations fail to achieve their full value-creation potential, as the acquirer overlooks the importance of the lessons which can be learnt from the acquired business. Perhaps the most important thing that we learned in developing our integration model was that all Apex Group workstream should be partnered with a member of the acquired business. As a result, every workstream in the integration is co-led by an individual from Apex Group, and manager from the acquired entity side who manage, run and execute their workstream for the integration. In this way, we create a very cooperative environment between the acquired entity and Apex Group.

Business leaders should be open and receptive to acquisitions which can bring different ways of looking at their processes – continuous improvement is key, and when acquiring a company, all departments can benefit from an ‘outside in’ view. This can help shape and evolve the overall strategy of the business, adding new mindsets, as well as providing access to new technologies and fresh approaches.

Take technology for example. When Apex Group acquires a company, we do not immediately assume that our technology systems, platforms and ways of doing things is the best or indeed, only way. Rather than imposing “our” approach on acquired entities, we carefully evaluate what we can learn from the business we have bought, and how that can be collaboratively integrated into our company.

3. Lines of communication

It can be easy to become inward focused during an integration process and lose sight of the bigger picture. Regardless of your sector, reassuring customers or clients around the continuity of personnel and quality of service is essential. Clear lines of communication and regular updates on the integration can help to allay concerns which may come about during the transition process and anticipate any potential unhappy clients before problems arise. This is a particular strength of Apex Group – during our acquisitions, we have not lost a single client as a result of an integration decision.

It is also important to communicate to the market, not only the strategic rationale of the deal, but update the wider industry about how your business has evolved, educating stakeholders on any new capabilities, services or geographic footprint and disabusing incorrect assumptions. For example, five years ago Apex Group was a fund administrator with 3,000 employees – and now we are a global financial services provider offering solutions from digital banking to ESG, employing 10,000 people. It is imperative therefore, that your employer brand keeps up with the pace of acquisition and change.

4. Cultural cohesion

While a less tangible asset than those recorded on spreadsheets, culture is crucial, with research showing that this factor could be the strongest determinant of the long-term success of the transaction. In our experience of integrating acquisitions, creating a shared sense of identity is a top priority.

Once the deal closes, it is essential to initiate early communications and give employees a collective sense of purpose and to build trust and momentum. On the downside, delayed or misjudged communication at this early stage of an integration can create negative impressions which are difficult to shift.

At Apex, we have demonstrated the benefits for new employees of becoming part of a global business – explaining the new services that will benefit their clients, as well as the personal benefits for them – including provision of best-in-class training, learning and development as well as access to career progression opportunities in a global career mobility through a network of offices.

Summary

As we have seen at Apex, there are huge potential opportunities created by successful M&A, if integrations are managed correctly. When done right, M&A activity can deliver not only growth or scale, but clear strategic advantages, including the addition of new markets, products and technologies which can benefit your clients.

About the author

Christopher Mulhern is Chief Product & Technology Officer at global financial services provider Apex Group. Christopher joined Apex Group in October 2017 following the acquisition of Equinoxe Alternative Investment Services. He has over 20 years of experience leading operational strategy within the fund services industry and was brought into Apex to oversee the global Group’s structure and operational framework and has successfully led the strategic integrations of multiple businesses simultaneously.