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The rental world is on fire with mergers and acquisitions. It seems like everyone is either looking to buy or looking to sell. But what happens on the integration side once the deal gets done?
Creating a battleplan — one that includes all the stakeholders — is the key to a successful or painful integration. Organizations are typically very good at creating deals. They also tend to be fairly good at the due diligence and discovery part of the process. They nail down the highlights and hope they uncover as many snake pits as possible. But ultimately, the integration details are pushed down to the department heads. From my conversations with various company heads, along with a little bit of personal experience, I learned that the most successful integrations are facilitated by a project manager adept at using software tools designed to keep all departments on task and stick to pre-established timelines. Goals, or in this case plans, without timelines are just dreams.
When creating this plan, make sure not to overlook key departments in the organization: Inventory and replenishment, sales and marketing, information technology, accounting, human resources, and logistics. It could be argued that logistics should fall under inventory and replenishment, but many will ultimately decide that fleet management needs to be a separate section of the plan. My intent is not to give you a comprehensive list of all the things you need in each of the areas; but rather, I am sharing the feedback and a few considerations for each area of focus. Let’s take a look at each one.
Human resources
It will be important to identify the champions and detractors early on. Our goal is to give the champions enough ammunition early on to help influence the majority of the acquired associates. If we ignore this sales job, those on the fence could easily fall victim to the detractors.
Remember, when you acquire a company, you are disrupting the status quo. Many of these folks have tied their entire career to their organization and there will be fear of the unknown. Do not make the mistake of glossing over this. If possible, invite the new associates to the headquarters. Associate faces with names. Invite the new associates to share what worked well in their organization. Training must be a part of the human resource plan. This is especially true if there are technology changes. If we are going to be making procedural changes, be very clear about the reasons why the process is used. The phrase, “because that’s the way we do it,” will be a precursor to pain and suffering down the line.
Inventory and replenishment
There are several areas to consider here. One of the more challenging is the identification of supplier and vendor lines in common and those that will need to be added to the database. Even in some of the most promising integrations, where both companies use the same enterprise resource planning (ERP) software, we still have to struggle through the item code reconciliation. To the layperson, it can be shocking how many naming conventions suppliers and employees come up with for the exact same product. Beyond the common items, a whole new set of suppliers and SKUs will have to be added to the database. Cost variances need to be considered and regional pricing should not be discarded.
Sales and marketing
For the most part, businesses enter into these acquisitions for sales purposes. Whether it is new geography or taking out a competitor, sales is often the motivator. Some of the considerations my team members shared came around overlap of sales territories, go-to-market strategies, compensation methods and even sales vehicle policies. Seasoned territory salespeople may not be excited about playing nice with a company they have competed against for years. These relationships will have to be managed with kid gloves. Highlight the areas of commonality between the two entities. Appeal to enhanced compensation opportunities and greater access to products. As one of my members suggested, don’t try to cram the fancy CRM down the veteran salesperson’s throat. Find the easy commonalities and save the points of difference for later.
Sometimes the marketing folks get left behind in the planning process. This would be a tremendous mistake. The integration of two entities is all about communication. This is what our marketing folks specialize in. Make decisions about how the newly combined entity will be referred to in print, web and social media. Allow them to create campaigns piquing the interest of the new customer base. We have to remember that the acquired customer base can be just as nervous about the change to their beloved company and its staff.
Accounting
Functions like accounts payable and accounts receivable are often left out of the planning process, but they are vital components to successful integration. Credit customers will have to be vetted through the application process. Terms of sale will need to be updated and communicated with these customers. There will always be special credit deals, or cash discounts, and those will have to be discussed and agreed upon. The new entity may be more technologically driven in their approach to invoice management. The team will have to determine how they will handle customers who are reluctant to embrace technology. From an accounts payable perspective, suppliers will have to be onboarded and terms of sale will have to be established. Don’t overlook the nuances and special programs. Many of these will not be in writing and can be trapped between someone’s ears.
From an HR standpoint, accounting associates are often casualties in a merger. Be sensitive to this and don’t overlook the opportunity to augment the headquarters staff, even if they become remote employees.
Technology
If you are lucky enough to operate on the same ERP, consider this a monumental win. As long as both entities have been diligent with their updates and versions, the compatibility should be fairly painless and the users should be able to operate in the new environment. Unfortunately, this is not always the case. Conversion to one ERP is something that should be considered early on in the due diligence process. The acquiring entity may not have the superior solution. Take the time to review both solutions and determine the best fit going forward. Listen to the users. They are the ones who need to interface with it on a daily basis.
Beyond the ERP, make a comprehensive list of all the technology areas the company has invested in. Don’t overlook phone systems, fleet management programs, sales automation and integrated office productivity suites. Inventory their hardware components and determine what investments need to be made. If you overlook these areas, they will surely come back to haunt you.
Document the process
As I mentioned earlier, this is not intended to be a comprehensive battle plan for integration. Each one of these areas will have a myriad of questions and opportunities for improvement. I am simply challenging you to document a plan. If you are going to meter out responsibility to department heads, make sure that they are involved with the plan creation. Those who work in a role are better suited to see the potential areas of conflict. Before I let you go, I want to share one more piece of advice. Do a postmortem once the integration has matured. This after the fact analysis will help you avoid the challenges you ran into during the integration and allow you to replicate the things that really worked well. Without this follow up discussion, the highs and the lows will simply be trapped between someone’s ears. Good luck and know that I am here to help.
Jason Bader is the principal of The Distribution Team. His podcast, Distribution Talk, can be found at distributiontalk.com and most podcast applications. He can be reached via email at jason@distributionteam.com.