How Businesses Can Navigate A Smooth Transition Post M&A

Despite a turbulent few years for global business, mergers and acquisitions (M&A), which can be effective routes to growth for businesses looking to improve productivity, expand offerings, or enter new markets, are on the up.

Businesses seeking growth look to M&A

In fact, many businesses are embracing M&A; for example, this year, we’ve seen a raft of major deals in the North West and Yorkshire's biggest deal since 2021.

Astute business leaders looking to capitalise on the opportunity for growth recognise the benefits of M&A as a pathway to innovate or pivot, meet changing business demands, and drive growth objectives.

However, creating a new business entity, or consolidating two businesses into one can be a complex path, fraught with potential pitfalls. Research suggests that as many as 70%-90% of M&As fail or underperform. These figures provide a stark reality check, highlighting the fragility of dealmaking when the stakes are high.

The post-M&A transition

Having chosen to go down the route of merging or acquiring another business, once the deal has been done, the post-M&A transition begins. This stage requires careful navigation and handling complex supply chain and logistics operations requires effective management. Careful pre-M&A analysis and ensuring a clear strategy is in place are key to driving success.

Bringing in or redeploying a third-party, objective logistics consultant at this stage to oversee the post-M&A transition can prove invaluable as there's no "one size fits all" for M&As, with every supply chain presenting its own challenges and opportunities unique to its sector. Ideally, a consultant would be involved throughout the entire process—from the due diligence phase to project completion. However, their expertise will be a constructive addition at any stage of the project, providing valuable insights and strategies that enhance the chances of a successful transition.

Managing the change process

The aim post-M&A is to create synergy between the existing merged or acquired businesses, especially across supply chains, to help ensure a smooth transition. The early transition period is crucial and often throws up unexpected challenges that business leaders must navigate to maximise effectiveness and optimisation.

There are several factors to consider post-M&A when managing change. Here are some practical steps to help achieve a smooth transition:

1. Introduce parallel workstreams

Simplifying complex supply chains or merging existing technology systems and interfaces can be a complicated process, with the potential to derail existing operations. Consider operating dual workstreams during the early days to reduce disruption while new systems and processes are established and bedded in. This enables the team to transition more gradually – and can help provide a safety net if any issues arise.

2. Interrogate existing suppliers

If this hasn’t already been undertaken pre-M&A, auditing existing vendors will help identify issues and minimise disruption to the supply chain. Whether this results in establishing new relationships or exiting existing contracts, the earlier this can be done the better.

3. Change management across workforces

Some of the biggest challenges post-M&A can relate to people. Keeping colleagues at the heart of the process and achieving buy-in is pivotal to the success of the venture when implementing change. From handling the human impacts of redundancies, relocations, and warehouse closures, to empowering those with new job roles to take on different responsibilities and operate new systems, employees must feel involved and engaged.

4. Revisit due diligence

Review what was unearthed during the due diligence period before the deal and identify potential barriers and challenges. Time spent in the early transition period monitoring and evaluating can boost resilience across the supply chain and enable further improvements.

M&A route to ROI

Determining a business's future direction through the acquisition route is a monumental commercial decision and the pressure on business leaders to get it right is immense. Enlisting supply chain and logistics expertise can help manage change and direct supply chains, enabling businesses to hit the ground running and achieve maximum return on investment.

Phil Reuben

Phil Reuben is executive director at Yorkshire-headquartered global supply chain and logistics consultancy, SCALA.