Any transition can be difficult, be it a transition from a Democrat President to Republican President, or a merger transition that results from the acquisition of one firm by another, and subsequent integration. In both cases, readiness planning is key to a successful start. Significant work must be done early in the transition period to ensure that the Day 1 (i.e. the official start of the integrated new company) is successful, with minimal interruption to employees and customers. The key tasks and activities that need to happen for the integration to be successful make up the Day 1 readiness plan.
Building Your Transition Team
Like all newly-elected Presidential candidates, President-elect Trump has put together a formal transition team to manage key new appointments/hires and all communication. This team is responsible for communicating with the public and filling all required roles required to run the country, to ensure Day 1 of the administration goes as smoothly as possible.
Similarly, for the newly-merged company, a team must be put in place to prepare for official deal close, and Day 1 go-live. This “Day 1 readiness” team should include both high-level management, as well as leads from various key functions within the company. The readiness team must focus on maintaining continuity of services and minimizing customer impact. While President-elect Trump has a much larger customer base, a newly acquired company stands to lose customers and cash-flow as the result of a poorly-planned integration.
Just as Presidential transition starts as soon as the election result is officially called, Day 1 planning must start when the deal is announced (or before). The process must start by recognizing what must happen on Day 1, objectively identifying the highest priority synergies and those with the highest probability of success, and the key tasks needed to maintain internal and external operations. Internal operations include meeting any legal or regulatory requirements, establishing financials, ensuring accounting and financial activities continue, and critical operational reports are created. External activities refer to activities required to run the business. Identifying and executing “quick wins” can help build momentum, boost morale within the firm, and help the team make the transition to more complicated initiatives.
Communication is Key
The Day 1 transition team must communicate to both customers and employees throughout the process. Employee perspectives must be considered, as they play a critical role in achieving success. As a result of the acquisition, a new organizational structure might be needed, which may involve creating independent organizations, a blending of organizations across the two firms, or significant layoffs. Although employees are frequently left out in the planning process, the loss of key employees during the transition period can cripple the new organization. It’s understandable that employees may be nervous with the potential changes, but this can be mitigated with a good communications plan. Lack of communication can lead to low morale within the organization, which in turn may lead to loss of productivity. A clear message must be delivered to employees, as people want to know what lies ahead, particularly in times of change. Methods of communication should be set up, including a website or other channels. The transition team should solicit feedback, answer questions and conduct both department and company-wide all-hands meetings to ensure employees are not in the dark during the transition process and to facilitate any required change management.
Other Day 1 decision making must include branding, logos, email addresses, website and business names. Any potential changes must be communicated to customers, as well as key suppliers. Again, planning plays a critical role. The earlier these decisions are made, the earlier they may be reported, which can help in ensuring there is no interruption of service. If necessary, key customers should be contacted to provide reassurance and any direct impact to service should be quantified.
Establish a PMO
In order to manage the integration and Day 1 readiness planning, a project management office (PMO) should be set up. The PMO should consist of a PMO Director, Program and Project Managers, as well as a support team to execute programs and projects. The role of the PMO Director is to manage all functional-specific areas of the organization, manage enterprise-level projects, and the resources allocated to projects. All integration teams will report to the PMO, providing status on key activities, achievements and issues to be escalated. To assist in continuity, the PMO may retain members from the due diligence team. The PMO is a critical part of Day 1 readiness, providing structure for all teams contributing to the transitions. Because the role of the PMO is so critical, I’ll discuss this function in more detail in a future post.
The intent of a merger is to extract maximum value from the transaction, as swiftly as possible after closing day, with minimum interruption of service, just as President-Elect Trump will strive to show value and hit the ground running during his first 100 days in office. Through careful Day 1 readiness planning, merging organizations can minimize disruptions to customer, maintain morale and confidence within the organization and start Day 1 as a new company on the right foot.