The M&A Integration Process

Guest Profile

Jeff Muench is a dynamic senior executive and growth expert who has driven billions of dollars in incremental revenue through first-ever strategic initiatives. Jeff was previously the head of Strategy & Execution, and M&A Integration & Separation for Walmart. He created a world-class internal M&A integration and separation practice from scratch, executing 14 acquisitions and two separation activations during his tenure at Walmart(Bonobos, ELOQUII, Aspectiva, ModCloth, Vudu video, Art.com, Bare Necessities, etc.). Jeff received his MBA from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill and his BA in political science from Sewanee, The University of the South. He also engaged in post-graduate studies in intercultural management at ICHEC-Brussels Management School on a Rotary Ambassadorial Scholarship.

• Company: MassChallenge
• Location: Boston, MA
• LinkedIn: www.linkedin.com/in/jeff-muench/
• Website: www.masschallenge.org/
• Phone: (312)-203-7757
• Email: jeffemuench@gmail.com

Highlights

• Large companies, such as Walmart, will sometimes consider acquiring much smaller companies, such as a business only generating $1 million in annual revenue.
• Good integration can make a bad deal better and bad integration can kill a good deal.
• The acquirer may be reluctant to invest in integration until they know the deal is going to happen.
• Processes are critical to a successful integration.
• The biggest challenge in integration is blending two cultures.
• The leadership team of the target company must realize that their employees will experience trepidation during the transition and need to feel that their job security is important to the leadership team.
• The number one concern for employees of the acquired company is “How is this going to affect me?”
• An acquisition can affect the lives of all employees of the acquired firm. Culture is critical to a successful integration. You must build trust and relationships with the acquired employees as soon as you can in the process, and set expectations with them. They will experience peace once they know what to expect. The integration lead should be the emissary to the acquired employees.
• Integration primarily involves integrating both systems and people.
• Assess the cultures of the two companies before the acquisition to determine if they’re compatible.
• M&A is a steep learning curve — the more deals you do, the more you learn. The best companies complete a lot of acquisitions and institutionalize their knowledge, and continually improve all of their processes. The best way to do this is for the acquirer to maintain the same integration team so they improve with every transaction.
• Get the integration team involved as soon as possible.
• Walmart often did not let go of any employees of the acquired firm, although most of the employees had a new manager to report to.
• The companies can’t collaborate before the closing — this can be illegal and is called “gun jumping.”
• Integration creates value and can help realize synergies. The purchaser can discover ways to create value during the integration process. Integration is an opportunity and can be a strategic advantage for acquirers as opposed to companies that view it as glorified project management.
• Senior leadership should demonstrate that integration is a priority, although most of the work falls on middle management.
• Integration is both an art and a science.
• Much of the value in an acquisition is realized during the integration, so make it a priority.

Topics Covered

• Is integration part of the M&A team? [6:00]
• What is integration? [8:40]
• Can integration be reduced to a repeatable process, or is every integration so unique that it can’t be performed through a structured approach? [11:00]
• What types of companies was Walmart acquiring? [13:40]
• Why would Walmart acquire a company as small as $1 million? [14:40]
• How would a company know they’re a good fit as a potential acquisition candidate for Walmart? [15:50]
• How important is a process to integration? [21:45]
• What does one integration process look like? [24:45]
• How long does integration take? [25:50]
• Does it affect integration if the target is going to be run as a stand-alone unit after the closing? [26:40]
• When does integration planning start? [29:10]
• What is the biggest challenge in integrating two companies? [34:00]
• What is your advice to the seller regarding integration? Why should they care about integration? [47:00]
• How can the seller prepare for the integration process? [53:20]
• What are the most common integration problems that the seller can prepare for? [55:20]
• How does integration overlap with trying to realize synergies? [1:00:00]
• Who is involved in the integration process? [1:03:50]