3rd installment of Navigating M&A from Pre-LOI to Close.
Blog by Ben Greenberg, VP of Corporate Development at IT Solutions
If you’re considering M&A initiatives or navigating the challenges of growing your MSP, we invite you to explore our M&A resources.
As detailed due diligence nears completion and the definitive agreement discussions have commenced, it’s time to start thinking toward closing and integration.
If done right, the Letter of Intent (LOI) should be a strong basis for the definitive agreement; however, it’s not uncommon to have a few issues that need to be resolved between the parties.
If you’ve made the smart decision to use a legal adviser with M&A experience, you can expect they will walk you through various sections of the purchase agreement to finalize, such as:
As the buyer, you will also want to conduct confirmatory due diligence to ensure there have been no major changes during the diligence and negotiation period. Disclosure schedules often help guide this process. It’s also logical for a seller to hold a few client discussions or vendor discussions prior to closing (I recommend setting this expectation in the LOI).
While the final agreement is being negotiated, leaders from both companies should be developing their 100-day transition plans to combine organizations. Integration will be crucial to merge systems, processes, and all employee matters. You should never close an acquisition without an integration plan; this practice maximizes the probability of the deal thesis coming to fruition.
Integration plans should include:
One of the last steps prior to closing is collectively preparing announcements and notifications, including a strategic communication launch timeline, to create awareness and ensure that messaging is tailored and resonates with all stakeholders.
Common communications include:
Ensuring all staff are notified of the acquisition simultaneously (with the exception of key leaders) is critical. This can be done by sending a companywide email to existing employees during the newly acquired team’s kick-off event; however, this announcement should be followed up shortly by a town hall for all employees to allow for open dialogue. Messaging should cover the strategic rationale and provide an overview of the integration process, timelines, and any leadership/org. structure changes to expect. Sending an FAQ to all employees outlining anticipated questions and concerns is a great way to prevent staff from jumping to false conclusions.
Employees will understandably have questions about the transaction, so fielding Q&A sessions or scheduling follow-up meetings to address concerns helps ease anxiety.
Planning events and in-person engagements to celebrate the next chapter can go a long way toward motivating staff through the uncertainties that come with significant transitions.
Businesses should also notify critical technology, software, distribution, and other strategic vendors of the official closing news and expected timelines. While some of this may happen during the due diligence phase, it is important to provide formal notifications, especially if there are legal entity or payment changes, to provide continuity.
Schedule calls with customer leadership and your account managers to explain the strategic rationale and frame the messaging while expressing continued commitment to maintaining the highest standards of service quality, reliability, and continuity.
Discussing the benefits of expanded security capabilities, technical talent, geographic reach, or financial backing is important to outline additional value creation from the deal.
You may also want to develop FAQ documents and talking points for account managers to have handy to provide consistent responses to customer questions. Larger accounts may require additional virtual or in-person discussions from leadership. Account managers should offer meetings to answer integration questions and get ahead of client uncertainties. An open house 1 – 3 months after the announcement is also an ideal method to engage with customers.
Assuring all customer-facing teams are informed prevents mixed messaging and reassures clients through the transition period.
After the process of completing a merger or acquisition, there is still plenty of work to do. There may still be details to work out and agreement compliance measures to meet. Leaders need to put in place strategies to maintain momentum. Your strategy should ensure a plan to maximize value creation and develop a unified culture.
You’ll want to take a moment to celebrate your acquisition. Then, it’s time to dive back in and maximize your investment.
Embarking on a journey of M&A growth is both thrilling and demanding. If you’re considering M&A initiatives or navigating through the challenges of growing your business organically, we invite you to connect with Ben Greenberg, VP of Corporate Development at IT Solutions.
We’ve got answers — fast, clear, and tailored to your needs. Let’s talk tech.
