A Guide To Post-Acquisition Strategy Planning

Two companies have become one, and excitement, chaos, and challenges follow. With so many priorities competing for your attention after an acquisition, you may wonder whether you really need to revisit your strategic plan.

In a word, yes. The timing may not be ideal, but you need to rethink and update your strategy after an acquisition. Before we tell you how to do that, here is why post-acquisition strategy planning matters.

1. It helps create a single, strong company culture. Reviewing your plan as a unified team, including development, execution, and reporting processes, eases the “us versus them” mentality. Employees from the acquired company will feel valued and included, and they bring fresh perspectives to the strategy. The review also builds a cultural understanding between all parties and aligns the mission, vision, and goals.
2. It formalizes ownership and responsibility. With new team members in executive and strategic positions, there’s a good chance the acquired company’s internal structure has changed. Rethink who is responsible for specific goals, initiatives, and measures. That keeps everyone on the same page and makes the transition smoother.
3. It accounts for the added value of the newly acquired organization. The company was acquired for a reason. It may have brought new resources, products, or services. Any of these could change your strategy, and your plan needs to reflect them.

Four Tips For Post-Acquisition Strategy Planning

1. Consider the timing and costs.

While we do recommend reviewing your strategic plan after an acquisition, that doesn’t mean it needs to happen as soon as the ink is dry on the merger. Don’t delay the process a year, but do think through the best timing over the short term. Check whether key strategic and executive leaders are in place, whether major technology changes are in progress, whether you have the funding for a strategy review, and whether you have a timeline to finish it smoothly.

Weigh these factors before launching post-acquisition strategy planning. Plan changes and new processes will also take extra time, effort, and resources. You may already have a plan in place that justified the merger to begin with, so this step might not be as daunting as you think.

2. Conduct a SWOT analysis.

Merger and acquisition strategies always include a detailed report of the acquired company’s value and benefits to the buying company. After the acquisition is complete, you can take that report a step further and conduct a SWOT analysis.

When two companies become one, you need to understand the strengths and weaknesses of both parties and address the new opportunities and threats the acquisition creates. You may be able to enter a new market. Your sales cycle may have become longer. You may match up better against a competitor.

Keep the two axes straight when you combine both companies’ lists. Our guide to real-world SWOT analyses puts it simply. Strengths and weaknesses are internal: your people, product, processes and cash. You can change them. Opportunities and threats are external, like the market, the economy and regulation. You cannot change them; you can only see them coming.

Do the SWOT analysis together and make it part of your strategic planning process. It is another chance to reduce divisiveness and get insight from new team members.

Wide participation pays off. Cobb EMC, an electric cooperative outside Atlanta, started with a multi-level SWOT analysis by its Board of Directors and upper management. Its next SWOT, led by an outside consulting group, was significantly more enlightening than the first because more of the organization took part. By 2016 Cobb EMC had over 85 percent participation in its SWOT analysis, and it reached a 98% participation rate in 2019.

3. Don’t neglect important day-to-day processes.

Your high-level strategy matters, and so do the specific projects and initiatives the new team will work on. If nobody decides what happens on the ground after an acquisition, there will be chaos.

During your strategic planning review, go through the day-to-day initiatives and outline expectations, redefining individual roles if necessary. Walk through the smaller projects and steps so each has an owner and an execution team. For example, both organizations did sales before the merger. Now all teams need to agree on how sales will operate as one organization.

Pampa Energía, one of Argentina’s most important integrated energy companies, grows partly by acquiring other companies. As it grew, the businesses it added had different ways of managing. Each power plant had its own indicators, so benchmarking was impossible. Pampa set out to align all the management processes, taking the best part of each and establishing a standard process, with enough flexibility for each power plant to adapt it to its own goals.

In ClearPoint, each power plant now has its own scorecard with the same structure as the corporate scorecard: objectives, indicators and initiatives. Each element links to the corporate scorecard, so it is clear how each plant contributes to the plan. Every member of the organization can answer two questions: where is the company going, and how am I expected to contribute?

If you’re using the Balanced Scorecard model, it’s easy to adjust the high-level strategy and specific daily tasks hand-in-hand. Strategies are tied to goals, which are tied to initiatives, and so on. Because everything is connected, the Balanced Scorecard is a useful framework for companies building an acquisition integration strategy.

DC Thomson Media had made this a repeatable step. As it grew and acquired businesses, each new business integration involved the creation of a new scorecard in ClearPoint, specific KPI dashboards, project tracking aligned with business objectives, and integration into the overall strategic reporting framework. Because every acquired business reported the same way, all leaders had access to the same up-to-date information.

4. Aim for progress, not perfection.

Don’t expect everything to align perfectly during your post-acquisition strategic planning, because it won’t. There will be a period of trial and error as both parties adjust, reconcile expectations, and figure out new roles. Keep the strategic planning process flexible in the early stages. Structure matters, but be willing to adapt and work together to establish a new normal. At some point you simply need to launch the updated plan and correct course from there. Keep your strategy in motion!

Conclusion

Be transparent and communicate often during the acquisition strategy planning process. Collaborate as much as you can so everyone is bought in and clear on the changes you make to the strategy, starting with a joint SWOT analysis. This is hard work, and your new, bigger company’s success depends on it.