"The balance sheet is, at best, anecdotal." - Richard M. Rodnick
With the fanfare that the business of mergers and acquisition gets, you'd never know that once the transaction is complete, integration has to occur. For CEOs, this is where the headaches are. But for consultants, this is the pot of gold at the end of the rainbow. Post-Merger Management (PMM), or Post-Merger Integration (PMI), is huge.
The established order of things is that bankers sell the deal, lawyers close it. Hundreds of billions of dollars in value are at stake, but incidentally, since value is "a prophecy into the future" (1) and therefore negotiable between buyer and seller (2), the fact that integration after the deal is seldom considered is incredible, but not totally unbelievable. After all, prior to consultants entering the M&A market, mergers had the perception of being too complex and distracting to engage in regularly or on a large scale.
Much of the discussion at the Conference Board's 2004 Post Merger Integration Conference hosted at the Westin NY @ Times Sq on June 15 focused on these intangibles of the deal, including the organization's culture and the effects on customers. There was an emphasis on taking advantage of any such financial event to make changes that are critical to getting rid of the bad stuff and putting a new corporate identity in place. After reviewing all the top consulting firms (3) with a dedicated practice to merger integration, they all offer the same exact advice.
When HP bought Compaq, they started planning how to integrate both companies with their vast product portfolio, client lists, and conflicting employee cultures an entire year prior to the board giving the transaction a green light! Since then, they've been slowly evolving from a consumer products firm into a consulting firm. For example, they're partnering with other firms to give them free advice along with their technology. The advice works with their tech to create mostly new revenue streams and eager new partners. Ultimately, clients get more than advice; they get a partner to invest with them. And since HP is so large, a failed venture or two wouldn't cause too much damage. It's how HP has benefited from their merger - they've learned to throw their weight around. And they're showing an entire CG sector how to do it, too. (In the defense of CG guys, retailers have been launching private labels at a furious pace, forcing CG to also blur the lines of what they do.)
After hearing their presentation at the Westin (and subsequent Forrester Consumer Forum), I wouldn't be surprised if they surpassed IBM or Dell as the premier technology company.
At the Rodnick discussion hosted at the Harvard Club by CEO Clubs on September 22, the emphasis was on negotiation: "The first one who mentions money is always the loser". A truly dynamic speaker at 75, Dick Rodnick reinforced a lot of what you know and was one of those type of guys that told you like it is - he easily made you trust his judgment. Overall, I give both events 5 pluses for an outstanding learning experience and terrific networking opportunities.
Write to Al Berrios
1 As defined by the Internal Revenue Service
2 according to "legendary" dealmarker Dick Rodnick, founder and Chief Executive Officer of RSM EquiCo, a leading global investment banking firm specializing in mergers, acquisitions, divestitures and corporate finance for middle-market companies.
3 al berrios & co. Directory of Professional Service Firms
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