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How do you extract value from a business after acquisition?


Execution on acquisition strategy after purchasing a business is of paramount importance and can be the determining factor in the success or failure of the acquisition. In a previous article, we discussed the importance of how a good due diligence process helps identify potential risks and opportunities; however, it is the execution that transforms the acquired business into a valuable asset and maximizes its potential.


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Getting your due diligence right is clearly very important but even when you get this right, you can still fail without the right team to execute. In a recent Linked-In article, it was highlighted that the two main causes of post acquisition failure were the size of the deals and the acquirer stepping outside their core business.


Here is why having the right execution team is critical post-acquisition:


1. Realizing Synergies and Integration:


Effective execution ensures a smooth integration of the acquired business with the existing operations. It facilitates the realization of synergies, such as cost savings, increased market share, and complementary product offerings. A well-executed integration plan minimizes disruptions and allows the combined entity to function seamlessly, maximizing the benefits of the acquisition.


2. Achieving Operational Efficiency:


Post-acquisition, executing on strategic plans is essential to achieve operational efficiency. This may involve streamlining processes, optimizing resources, and identifying areas for improvement. Efficient execution leads to increased productivity and profitability, driving long-term value from the acquisition.


3. Retaining Key Talent and Culture Alignment:


Successfully executing the acquisition strategy includes managing the human aspect of the integration. Retaining key talent from the acquired business and ensuring cultural alignment with the acquiring company are critical for maintaining business continuity and fostering a harmonious work environment.


4. Managing Stakeholder Expectations:


Stakeholders, including investors, employees, customers, and partners, closely monitor the progress of post-acquisition execution. Meeting or exceeding expectations during this phase is crucial for building trust and confidence in the acquisition decision.


5. Seizing Market Opportunities:


A well-thought-out execution plan allows the combined entity to capitalize on market opportunities. This may involve leveraging the acquired business's strengths to penetrate new markets or introducing new products and services to meet customer needs.


6. Mitigating Risks and Challenges:


The post-acquisition phase may present unforeseen challenges. Effective execution involves proactive risk management and problem-solving to address these challenges promptly and minimize potential disruptions to the business.


7. Maximizing Return on Investment (ROI):


The ultimate goal of an acquisition is to create value and generate a positive return on investment. A robust execution strategy is key to realizing the anticipated financial benefits and achieving a satisfactory ROI.


Conclusion:


In the realm of business acquisitions, extracting value is vital for transforming a promising deal into a profitable venture. From integration to operational efficiency and cultural alignment, execution touches every aspect of post-acquisition success. A well-executed strategy ensures that the combined entity capitalizes on synergies, navigates challenges, and positions itself for sustainable growth and success in the market.


Finding the right team to execute, post acquisition, is critical to extract value and can yield the greatest return on your investment. Building a team who can support the business across key areas such as marketing, sales, product, finance, process, people, technology and change management can make or break an acquisition.


It is likely that most of the core team will be busy running core operations, which is incredibly important; however, the 'hidden value' is normally realised when a business steps outside of their core operating model and looks in less obvious places for answers - that is when the real magic happens.


If you're looking for a team, or an independent review, to help execute your plan and extract the most value from your acquisition, please contact us.



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