Preserve value by mitigating risk
- Identify opportunities and vulnerabilities in your target operating model. Consolidate risk governance frameworks, recalibrate compliance and risk management functions, and align the finance function and oversight in the combined organization. Evaluate the business value chain, target operating model, and the markets where the combined business wants to operate. Invest appropriate resources in the design of the target operating model to realize synergies without risking the strategy of the combined firm.
- Establish a dedicated synergies team that can cope with the scale. Identify the team responsible for synergy definition and tracking, and have them engage early with key departments. Create a formal communications program for cross-team collaboration as well as processes for documenting and distributing outcomes from key work sessions and decisions.
- Provide adequate coverage of foundational integration risks. Successful acquirers maintain an objective view of program issues and risks; and set a culture of transparency and openness so that program execution teams are empowered and encouraged to present factual information in a timely manner.
- Mind the integration culture gap. Value is lost when staff in a newly acquired company loses morale. Sit down with major players on both sides, appoint culture champions and recognize the role played by informal leaders.
An accelerated integration time frame will almost always enhance deal value. But without robust planning, centralized governance and dedicated resources (both financial and talent), speed is often achieved by cutting corners rather than enhancing capabilities.
Quality and risk mitigation may cause delay, but such decisions should be transparent and vetted in go and no-go discussions. There will always be mistakes, even in the best programs, so contingency plans should include triage and response teams as well as adequate staffing of customer-facing and internal employee functions (such as IT and training help desks). By mitigating preventable risk, banks can focus on creating value without leaving anything on the table.