As Private Equity (PE) firms continue to evaluate add-on acquisitions, executing a strong roadmap and avoiding any pitfalls should be top of mind. In this article, we provide some guidelines on achieving successful outcomes with your next bolt-on.
Continued market competitiveness for good deals has propelled PE firms to use several levers to drive increased value. With the lack of quality deals at attractive prices, many are turning to strategic bolt-on acquisitions to drive growth and value. The synergies from properly executed integrations, not only increase EBITDA and potentially reduce working capital, but also expands the acquiring company’s capabilities and resources.
Increasing EBITDA is dependent on creating value through a robust 100-day plan, and a relentless focus on value capture to ensure business doesn’t get in the way of realizing the benefits established pre-close. PE professionals can share war stories about integrations that could have gone better, and synergies that never fully materialized as planned. That’s why it’s so important to move quickly, both pre-and post-transaction to identify, document and validate the synergy potential, and work aggressively post close to drive the integration activities.
Here are six tips from the front lines as you consider your next bolt-on:
- Move quickly. Have a 100-day plan and start executing immediately
- Appoint an integration leader and identify surge resources to assist with integration activities
- Establish good project management tools and an integration framework to drive activities to capture deal synergies
- Address difficult issues early on
- Commit to one, shared culture; don’t underestimate the impact of culture
- Manage the change (integration is all about mobilizing change). Change management skills are critical
Focusing on these six key tips can help accelerate the realization of deal synergies and value of the combined enterprise.