Merger Planning & Integration: Best Practices for Private Equity Firms

Mergers and acquisitions are a key strategy for private equity firms. The process of integrating two companies, however, can be complex and difficult in practice.

That’s why a detailed, well-thought plan is key to success.

“Middle-market and lower-middle market businesses don’t have the surplus of people that publicly traded businesses would,” BluWave co-head of research and operations Scott Bellinger says. “Bringing in a BluWave resource will let those resources focus on their day-to-day jobs while outsourcing the integration to an expert who can do it on a much quicker and efficient timeline than trying to do it internally.”

We’re going to walk through the various steps and best practices at a high level.

Two people are shaking hands while someone else excitedly observes in the background. You can only see from above the waist to below the neck for all three people.

Merger Planning & Integration Process

Identifying Potential Targets

The first step in any M&A process is to identify potential targets that align with investment strategies and offer growth prospects.

This involves conducting market research, evaluating competitors and considering companies that fit specific criteria. It’s important to consider factors such as the target company’s financial performance, product offerings and market position.

Conducting Due Diligence

Once potential targets have been identified, it’s time to conduct a thorough due diligence process. This is done to assess things like the target’s financial and operational health, legal and regulatory compliance, and management and personnel.

Bellinger says this essentially comes down to a “synergy assessment” of the buyer and the target.

This is critical to thoroughly understanding the organization before it’s acquired. Reviewing financial statements, interviewing key personnel and evaluating systems and processes are integral parts to most diligence exercises.

Negotiating Terms

After due diligence is finished and a company has decided to move forward, it’s time for both sides to negotiate.

The better the communication between the buyer and the acquisition target, the more likely both will be satisfied with the outcome. That being said, they should carefully consider the terms of the deal before signing to ensure it makes sense for their business.

Integrating the Acquired Company

The final step of any M&A process is integrating the acquired company into the portfolio.

Bellinger says this typically takes between 90-120 days and is focused on integrating various integration streams.

This often involves combining operations, systems and processes. The more detailed and clear the integration plan, the better.

Typical key factors include cultural differences, employee morale and operational efficiency.

An experienced interim CHRO can be a valuable resource in these situations.

Best Practices in Merger Planning & Integration

A cross-functional team of experts from finance, operations, legal and other areas can make for a comprehensive and coordinated approach.

The right plan will outlining the required steps – in detail – to smoothly integrate the acquired company into the PE firm’s portfolio.

To the degree that it’s legally permissible, the firm should keep employees, customers and other stakeholders informed throughout the process. Sometimes no news at all can spook key stakeholders, even if everything’s going according to plan.

It may make sense to hire an interim CFO who’s experienced in these situations and can hit the ground running.

Merger planning and integration is a specialty of the service providers in the exclusive BluWave-vetted network.

“Engaging these firms pre-close can help you understand and validate cost synergies after the acquisition is complete and integrated,” Bellinger says.

Each resource goes through a rigorous evaluation before its admitted into the network, and again before we connect them with you. Instead of spending days or weeks searching for the right resources to plan your merger, we’ll provide the two or three “best fits” within a single business day.

Challenges of Mergers and Acquisitions: Why They Fail

The majority of mergers and acquisitions fail. But why is that?

This can happen for many reasons: disunity, lack of communication, impatience, poor due diligence.

In any case, many of these failures can be avoided, either by better planning, or by calling off the engagement when the two sides realize it’s not meant to be.

We’re going to look at some of the more common reasons mergers and acquisitions fail, along with some potential solutions.

Success/Failure Rate of Mergers and Acquisitions

Instead of asking, “What percentage of mergers and acquisitions are successful?” you may be better off asking “Why do acquisitions fail sometimes?”

That’s because between 70-90 percent of M&As don’t work out, according to Harvard Business Review.

If you’re about to execute a merger or acquisition, don’t be afraid to seek outside, experienced help.

The right resources will know where your blind spots are and how to overcome them.

Here are some of the common M&A pitfalls, and how to avoid them.

Vague Goals and Timelines

The acquiring must be crystal clear about what it wants to achieve and create a detailed plan to reach those objectives.

In many cases, the acquiring company may rush into a deal, perhaps because it sees an opportunity to acquire a competitor or gain market share. A lack of strategic thinking, however, can lead to poorly executed transactions that fail to deliver expected results.

Companies should instead take the time to develop a clear strategy. It should not only outline the company’s goals and objectives, but also specific dates by which they want to achieve them.

SMART goals are a good starting point, and may help avoid wasting time and resources on poor execution.

READ MORE: Merger Planning & Integration: Best Practices for Private Equity Firms

Overpaying for a Merger or Acquisition

Companies may become too focused on the potential benefits of the acquisition, leading them to overlook the true value.

They may also overestimate the potential benefits, and fall in love with ideas that will never become reality.

One example of this is when AOL and Time Warner infamously merged Jan. 10, 2000, in a $350 billion deal. Ten years later, the companies’ combined value was around 14 percent of what they were worth when the merger was announced.

There are many reasons why this marriage failed, but one thing is clear: the price tag was far too high.

Poor Communication

This can be a major contributor to failed mergers and acquisitions because it often leads to confusion. Employees are often collateral damage to this crucial mistake.

If they don’t understand how the merger or integration will affect their job, they may start to develop anxiety and mistrust. This could snowball into a lack of engagement and motivation, leading to lower productivity and higher turnover.

Lack of communication may also mean companies don’t fully understand each other’s processes or objectives ahead of time.

Instead, they should develop clear communication strategies. This can by done via proactive updates and welcoming feedback from those who may not be directly involved in making decisions.

Unrealistic Expectations

Some companies expect acquisitions to deliver immediate benefits without fully understanding the time and resources required. This is a surefire way to put key stakeholders on edge, leading to disappointment and frustration.

The better expectations are managed from the beginning, the more time leadership will allow for everything to fall into place.

If you get everyone’s buy-in ahead of time, when the pressure does begin to mount, you can remind them about the original plan to which they agreed.

READ MORE: Post-Merger Integration: Framework, Keys to Success

Misunderstanding the Company

Some key factors to understand about the target company pre-acquisition are its business model, market position or customer base.

This may be particularly difficult if the companies being joined have a lot in common. Perhaps their customer base is similar, but they have a completely different approach to acquiring new clients or sales.

It can sometimes be easier to join two companies that have little overlap. One example of this would be when Amazon bought Whole Foods for $13.7 billion in 2017.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO, at the time.

Amazon was not a leader in offering “natural and organic foods” before the acquisition, meaning they could rely on Whole Foods’ expertise in that area without the challenges of merging with an existing process.

Poor Due Diligence

If the acquiring company fails to conduct adequate due diligence on its target, they may overlook key risks or fail to identify potential synergies.

This is a smart time to bring in an experienced outside resource.

The BluWave-grade service providers in our network have helped PE firms hundreds of times in these exact situations. They leave no stone unturned so that both parties can move forward with confidence and begin their journey together without any surprises.

READ MORE: What is Commercial Due Diligence?

Cultural Differences

When two companies have different cultures, values and management styles, it opens the door to conflict and perhaps lack of cooperation.

To address this, companies need to be proactive in addressing cultural differences and develop a plan for integrating the two cultures. This may involve cross-cultural training, mentoring programs or the development of a shared set of values and goals.

An interim CHRO can be a invaluable resource in these situations.

READ MORE: Private Equity Interim CHRO: What Are the Benefits?

Operational Differences

Similar to cultural differences, operational differences can also pose a challenge in mergers and acquisitions.

The two companies may have different systems, processes or procedures, which can lead to inefficiencies or a lack of coordination.

The solution is to identify the key operational differences between the two companies and develop an integration plan. This may involve the adoption of new technologies or systems, or the development of new procedures or workflows.

Consider hiring a strong IT due diligence resource in these situations.

Regulatory Issues

The two companies may be subject to different regulations or legal requirements, which can complicate the integration process.

Carefully review each company’s regulatory environment to identify any potential obstacles or challenges.

Involve legal experts in the due diligence and integration process to ensure full compliance.

READ MORE: Healthcare Compliance: Due Diligence Checklist

Mergers and acquisitions are complex transactions that require careful planning, due diligence and effective integration.

While there are many reasons why mergers and acquisitions fail, many of them can be avoided.

By proactively addressing the key challenges, companies can increase the chances of success in their new business relationship.

Fortunately, we have hundreds of expertly vetted service providers who know how to confront each and every one of these challenges, regardless of your industry.

If you’re considering merging with or acquiring another company, set up a scoping call with our research and operations team to see how we can help things go as smoothly as possible.

In the Know: How to Tackle Merger Integration

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, Scott Bellinger, BluWave Consulting Manager, shares some of the top reasons our clients bring in merger integration groups and the benefits they gain from them. Learn more by watching the video below.

Interested in connecting with the PE-grade, specialized merger integration providers you need? Contact us here to quickly get started.

Video transcript:

According to data from the BluWave Activity Index, third-party merger integration specialists are consistently one of the top 10 service providers that private equity firms look to for support. Add-on acquisitions are standard operating procedure in private equity, and leading firms rely on expert third parties to seamlessly execute any integration. Here are some of the top reasons PE firms bring in merger integration specialists and the benefits they see from engaging these groups.

When integrating two companies, the goal is always for 1+1 to be greater than 2, however, if not integrated properly, a new add-on investment can quickly go south.  PE firms who trust their integrations to expert third parties can guarantee that the integration will be executed properly, resulting in an outcome greater than 2. Additionally, by trusting their integrations to third parties, they are able to rest assured that their companies will be fully integrated – something that strategic buyers are looking for more often. Plus, if the integration is occurring in a founder-led business, a third-party expert is essential given that most founder-led businesses rarely have the talent in-house to effectively integrate both businesses.

The benefits of utilizing these experts go far beyond achieving an outcome greater than 2. For one, these groups can excellently integrate companies quickly – our pros can perform an integration from start to finish in as few as 120 days. Plus, some of our innovative groups can provide additional services complementary to strictly executing your merger integration, such as conducting a pre-merger synergy assessment to help you better understand potential cost-savings beforehand.

We would be happy to connect you with the PE-grade third-party merger integration expert that is exactly suited for your needs, just give us a shout at

Merger Integrations: How BluWave Helps

In our latest BluWave Studios video, Keenan Kolinsky, a BluWave Consulting Manager outlines ways BluWave supports clients looking for third-party merger integration expertise:

  1. Scope out the type and level of support that the client is looking for.
  2. Match client with select exact-fit providers in our network based on criteria, budget, timing, and more.
  3. Connect clients with extra merger integration support such as pre-merger synergy assessments and TSA support.

Watch the video to learn more.

Interested in learning more about merger integration support and how we can help? Visit the Merger Integration Hub.

REDIRECTED How merger integration specialists help improve M&A success

Mergers and acquisitions are intended to create an organization that’s worth more than the sum of its parts. But this process all too frequently gets bogged down by lack of planning, procedural and cultural misalignments, and poor follow-through.  As a result, the newly formed whole is often worse off than the individual businesses were before they merged.

Private equity (PE) firms are experts at acquiring and integrating businesses.  They leave little to chance when it comes to the success of add-on acquisitions by their portfolio companies.  Instead of hoping that all the pieces will simply fall into place once a merger gets underway, top PE firms use specialized PE-grade merger integration advisors from BluWave’s Intelligent Network to help guide and keep portfolio company acquisitions on track. These merger integration experts know what steps need to be taken and when they need to be taken in order for an acquisition to live up to its full potential.

For the deployment of third-party professionals to be effective, there are several best practices investors and companies should observe. Let’s take a closer look at them.

Planning leads to alignment

There’s nothing more essential to a successful merger integration process than planning for aligned success – on business objectives, culture, and a wide range of other issues. But it’s impossible to bring different systems and workforces into alignment without a full accounting of what each company’s strengths and weaknesses are, how tasks and roles will be designated, how success will be measured, and so on. Making these determinations takes planning.

According to a survey conducted by KPMG, 78 percent of companies that have gone through mergers say they intend to prioritize better integration planning for their next merger, and even higher proportions said they’ll focus on improving internal communication (84 percent) and cultural integration (81 percent). Almost two-thirds said they would try to improve performance management.

These are all core elements of a successful transition, and each one is very difficult to execute without a comprehensive planning phase. The leadership teams in most companies are not natural experts at planning for merger integrations – it’s not central to their roles, nor should it be. As such, they’re usually not very good at it and also don’t have the luxury of time to learn how to be an expert.  Third-party merger integration advisors have chosen to be experts in this field and help their customers get this critical phase right the first time.

Ensure that roles are well-defined

By bringing in dedicated third-party integration support resources, company leaders and employees will have specialized partners who can help them think through the nuances of how roles and responsibilities should be described, defined, and delegated within the newly whole company.

According to the 2020 PwC M&A Integration Survey, just 22 percent of change management programs include employee onboarding. While half of the companies included a specific focus on culture in their merger integration process, this proportion drops to 37 percent for organization, 36 percent for communications, and 34 percent for leadership. These numbers demonstrate that companies which have gone through the merger integration process aren’t nearly as concerned as they should be with managing their personnel. This is reflected in the fact that the proportion of companies reporting “significant success” in securing post-merger employee retention collapsed from 56 percent in 2010 to just 10 percent in 2019.

Companies should work with third-party HR and transition specialists who can help them identify the areas where employees will be most productive, which will improve morale and make the transition more effective.

Focus on capturing synergies

One of the biggest obstacles companies face during merger integrations is being able to allocate the appropriate time, focus, and attention to tangibly achieve targeted synergies. PwC reports that, while 70 percent of companies had synergy plans in place when the deal was signed, only 13 percent said they had “very favorable” results capturing revenue synergies while 10 percent could say the same about cost synergies. When companies captured synergies, shareholders saw gains in excess of 10 percent.

According to McKinsey, the most successful acquirers proactively focus on synergies, moving deliberately to capture more than 50% of targeted gains during the first 12 months.   By bringing in third-party merger integration experts, companies benefit from dedicated and professional project management focus and attention that make sure both the acquirer and acquiree are working with purpose and urgency to achieve promised results.


A merger or acquisition can be one of the most strategically impactful or value-destroying initiatives a company can undertake.  The private equity industry and other world-class acquirers understand this.  Merger integration specialists are one of the lowest costs workflows in a merger or acquisition process, but at the same time offer one of the highest returns on investment by meaningfully improving the chances that the combined companies will capitalize on their strengths, mitigate their weaknesses, and create far more value than they could have on their own.


We have a deep bench of PE-grade merger integration experts in our network, contact us to quickly get connected to the exact-fit provider you need.

REDIRECTED Why third party expertise is vital for merger integrations

At a time when private equity (PE) deals are soaring, merger integration (MI) has become a top priority for PE funds and their portfolio companies. Considering the huge number of moving parts in any merger, acquisition, or add-on transformation process, it’s vital for funds to make the experience as streamlined and comprehensive as possible. Increasingly, PE funds are looking to third parties with specialized expertise to help them execute mergers in a way that will realize their investment thesis, keep employees happy, and ultimately lead to more successful outcomes and accelerated growth.  

According to PwC, the first five months of 2021 saw PE deal volume increase by almost 22 percent. This influx is being driven by concerns over impending tax changes, low interest rates, and record levels of dry powder: more than $150 billion in the United States alone. To capitalize on this unprecedented market, PE funds have to be capable of moving beyond the 1 + 1 = 2 mindset when it comes to mergers – they need the resources that will enable them to make mergers worth more than the sum of their parts. This is where third-party merger integration experts come in.  

Create a dedicated team responsible for merger integration 

One of the biggest obstacles companies face in the merger integration process is the lack of communication and organization that can result when there aren’t clearly defined positions and policies undergirding that process. This is why the establishment of a dedicated integration team can make mergers far smoother and more productive by centralizing responsibilities, providing expert guidance, and freeing up time to focus on daily activities.   

According to a 2021 survey by Bain & Company, finding teams with the “right depth and breadth of experience” is the top integration challenge companies cite. Practically all the other challenges are directly related to getting people aligned around the same processes and goals: coordinating with business units, delegating authority within and between teams, bringing partners together, structuring teams properly, and developing a coherent and consistent merger mandate. When companies deploy dedicated third-party merger integration teams, they’re in a much stronger position to address these challenges.  

What the pre-merger phase should look like 

Although mergers can help companies create value very quickly, they can actually have net negative effects – from clashes between newly integrated teams to a lack of alignment on core objectives. To minimize these risks companies should use expert third-party resources to ensure that they’re accounting for potential misalignments and identifying areas where they can build on shared strengths with their partners in the premerger phase.  

For example, companies should conduct a synergy assessment (a review process that often takes several weeks) as early as possible. According to PwC, 70 percent of companies have synergy plans in place at deal signing, but these plans should be developed and integrated early to be effective – the companies that involve MI teams early in the deal process are 40 percent more likely to see favorable outcomes. Companies also have to conduct due diligence to identify potential problems before they arise – as a Deloitte report explains: “Premerger due diligence will ferret out things that are measurable, with an emphasis on financial data.” Finally, it’s crucial to focus on planning during the post-signing and pre-closing period, which will set teams up for success moving into the post-merger period.  

Guiding companies through the post-merger phase 

The first few months after a merger are critical to the development of a healthy and productive relationship between new partners. This is where third-party resources can really demonstrate their value – they have the necessary expertise to make the essential elements of the transition flow smoothly. These experts often have experience with the merger integration process that business leaders lack, which gives them a unique perspective on cultural issues that can arise, the importance of clearly assigning post-merger roles, and the ability to identify the most essential goals and track progress toward them.  

Third-party resources don’t just offer specialized merger integration expertise – they can also give senior company leaders the time and space to focus on the more strategic elements of the merger while knowing that they have experts monitoring the tactical elements of the combination and keeping all parties on track. These are all reasons why companies should consider working with third parties throughout the MI process – they can make the process more efficient, anticipate problems and address them when they arise, and increase overall performance and growth.  


We have a deep bench of PE-grade, pre-vetted merger integration resources in our network. Allow us to connect you with the provider best-fit for you based on industry, budget, and more. Contact us here and we will be happy to help.

An Interview with Trivest Managing Partner Troy Templeton

At first glance, Troy Templeton is a stereotypical private equity managing partner demonized by the click-bait driven media machine and industry detractors as “people in charge of thrashing companies only to fill Steven Schwarzman’s pockets.” Is part of his role at Trivest to make money? Of course, because that is the role of any business. But when I spoke to Troy—who joined the “oldest private equity firm in the Southeastern United States” in 1989—he told quite a different story than the general public is used to seeing in the headlines.

From his “Just Say No” philosophy to Trivest’s proven “Path to 3x” methodology, Troy considers his main job as the firm’s leader to be “acting as a steward of any business we put its dollars into”; thus, preserving the positive aspects of the culture and providing incentives for founders to take their business to the next level instead of cashing out to fulfill their childhood dream of racing cars (which some inevitably do). With all the disruption happening around us, it’s nice to hear about those who value hard work, job creation, and stability over the long-term—while prioritizing high-growth and money-making. Perhaps this is the headline we should all strive to attain, despite the naysayers’ seeming grasp on the narrative.

Sean Mooney: I’ve heard you say “we run a business not a deal shop.” What do you mean by that?

Troy Templeton: From the beginning of Trivest (1981) the investment philosophy was always about finding good deals and working with companies to make them more valuable. At first, this meant doing a couple of deals a year. But over time, the realization was that we needed to build a scalable business model for PE, otherwise we would just be a deal shop. In order to consider ourselves a business, we worked on the three main components of an investment (deal sourcing, deal execution, and value creation), and put process, data, and strategy around each one of them to make it scalable.

SM: Any chance you will open the kimono on how this works, even on a high level?

TT: Well, for starters, in terms of deal sourcing: we used to source about 300 deals per year, which translates to roughly 25 a month. In June 2021 alone, we sourced 418 deals; and we will likely end up sourcing around 4,000 deals this year. That’s over 10x in deal sourcing compared to what it was with the old model. We’ve done that by investing heavily in this area, and almost 20% of our firm is comprised of business development professionals. We are not reliant on a single source of deals; instead, we source from multiple channels and have a strategy for finding opportunities in each of those channels. We no longer have to wait for good deals to find us because we are proactively going out with a dedicated team and finding them.

With regard to deal execution, it really comes down to differentiating in a crowded market. In other words: how can we convince an owner to choose us based on things other than price? Our model eliminates pain points for the seller with our “Just Say No” philosophy. This pertains to saying “no” to things like requiring them to reinvest proceeds, aggressive capital structures, requiring heavy debt burdens, escrow requirements, and indemnification or working capital adjustments. We want the seller to see us as stewards of their life achievement. We want to be fair and transparent where both parties feel good afterward.

Lastly, it’s about value creation. This is what PE is all about. In public markets just 4% of public companies triple their value over a five-year period; but 75% of Trivest companies triple their value over five years. This value creation process is called the “Path to 3x.” Every company has six areas of focus: category of one (differentiate), management, measure what matters, organic growth strategy, acquisition strategy, benchmarks to measure against greatest companies. If we can work with a company to align and execute on these areas, that is where the real value is created, and ultimately money is made.

SM: If you’re a founder-owned business considering private equity as a path for expansion and growth, what are the most important questions to ask potential PE investors?

TT: The first question is “will I have to reinvest?” Not all founders will want to do this, but they never ask the question upfront. We had a very successful investment (it was a 10x deal) where three of the key players wanted to reinvest nothing. They wanted a 90-day “out” plan so they could go race cars. Most PE funds wouldn’t invest in this situation, because for the most part, they want founders to reinvest.

The second question is “will I receive 100% of the purchase price at closing?” This question is important from a deal perspective. The devil is in the details, and some term sheets will require all these costs (escrows, working capital adjustments, seller note, earn-out, etc.) that will lower the purchase price significantly. Owners should understand what they will get at close.

I also think owners have a responsibility to ensure their company has a proper chance to succeed, and it shouldn’t be just about the seller maximizing value. An owner should be asking themselves whether the company will be better off five years from now if we do this deal. So, this translates to the third question: “how much debt is going to be on my business moving forward?” Businesses fluctuate, and if an appropriate capital structure is not in place for the company to help it weather whatever storms occur over the next several years, then both the buyer and seller lose. To avoid this, Trivest has a policy of only using senior debt and no more than 3x of operating cash flow.

SM: Have any investments you’ve made outperformed your expectations? How and why?

TT: We purchased a small plumbing business in Kentucky about four years ago and used the “Path to 3x” to build it up significantly through roughly 15 add-ons. During the pandemic, the business started thriving. With each add-on, the founders remained in place after they sold. We minted over 20 people becoming millionaires: this was a life-changing event for most of them. Additionally, 100 employees were shareholders—since we believe strongly in bringing as many employees into the equity of the business as possible. It was such an amazing thing to witness and play a role in, as this isn’t something you normally see in a privately held business.

SM: In terms of “Topgrading”—a term that simply means ensuring the right people are in place—how do expert, third-party resources play into that?

TT: The key to Topgrading isn’t just about the CEO and C-level. It’s also about the next two layers below the C-suite. This is where you can make a dramatic difference, but unfortunately, far too many companies don’t focus on it. I think this is why Trivest has been growing so quickly, because we’ve used this concept in our own company, and it works! Our business development team is filled with great people who “own” their function, and as a result we’ve been able to build a culture of success around it. For any organization, this is an important part of overall company health. While leadership has to come from the top, if you don’t empower other levels of the organization to thrive, then you essentially build a layer of dependency into the process. When that happens, it becomes nearly impossible to scale.

SM: Add-on acquisitions are a core part of the Trivest playbook. In your opinion, what are a few elements that ensure a smooth transition and integration process?

TT: We’ve done about 75 in the past couple of years. Truthfully, some worked and some didn’t—but that’s all part of the risk portion of being an investor. Here’s what we’ve learned:

First up, there has to be a business fit. A lot of people will buy companies when there isn’t a reason for the companies to be together. It’s just about size and irrelevant to the core business; you see this a lot with tech companies. In addition to business fit, there also has to be a cultural fit.

Second, communication must be prioritized in order for the integration to work. You have to be transparent, otherwise, people will think the worst about what’s going to happen (read: they think they are going to get fired). This uncertainty leads to poor performance, and ultimately, people leaving whether this was part of the plan or not.

Third, and likely most importantly: you need a “butt on the line.” Someone has to be responsible for the transition, and you need a dedicated resource to be held accountable for any missed opportunities or failures (and successes too).

SM: If private equity didn’t exist, what would the economy look like?

TT: This may seem hyperbolic, but (especially after 2020) it would be in shambles. Private equity is a key component of liquidity, and a key buyer in every major, essential industry. If PE didn’t exist, founder and/or family-owned businesses could only sell to strategics or a management team. You’d have more public companies, which on average perform poorly compared to PE-backed companies—as I noted earlier. The focus may largely be on cost savings and making money, and wouldn’t necessarily account for people or culture. In short: there would be fewer options for selling, with worse outcomes for the companies post the sale.

Also, to wit, you never hear about the other side of the PE-equation: what these companies we invest in do for their families, communities, and partners. Most founders who realize their life’s goal by selling their business don’t immediately go out and buy a yacht and a new mansion, rather—they typically invest in other companies, provide security for their families and become much more philanthropic. Yes, sometimes they pursue their hobbies like racing cars…but that’s generally the exception and a small part of their overall net worth.

Without private equity, there would be no vehicle for most investors, large and small, to participate in the most vibrant and growing part of our economy—lower and middle-market companies. PE is an important growth engine of the economy, and the economy wouldn’t be nearly as robust.

SM: What is one thing you wish everyone understood about private equity?

TT: I wish everyone would think of us like the Meghan Trainor song “It’s all about that bass”—except for us it’s: “It’s all about that growth.” If we are growing, then our companies are going to do well. From the frontline workers to the founder to the investor, it’s a win-win. Money is simply a byproduct of being a good steward and helping a company grow. [drops the mic]

REDIRECTED Merger Integration Elements of Success

Every year, the private equity industry focuses a tremendous amount of energy on add-ons as a core expansion strategy to build bigger, better, and more valuable companies. We saw a particularly strong amount of activity last year during the pandemic as competing businesses saw more value being more together than apart. This trend has continued into 2021, and as such we’ve seen an uptick in requests for specialized groups and individuals with deep experience in merger integration. 

According to our Intelligent Network merger integration experts- who have focused their careers on making merger integrations go well the first time- there are several key elements that allow merger integrations to flourish. If you’re considering an acquisition or add-on as part of your long-term plan, keep these elements in mind before you pull the trigger. 

ELEMENT #1 – Keep an open mind 

Keeping an open mind during the initial integration process helps eliminate bias and allows the process to move more quickly, while also avoiding employee and customer attrition. You’re acquiring the target for a reason.  You’ll no doubt find a wealth of perspectives in your target that will make the combination better for all.   

ELEMENT #2 – Know the investment thesis 

If you have a clear understanding of the investment thesis and how the integration fits into the broader picture then it will be much easier to develop a roadmap and, as Stephen Covey aptly asserts: “begin with the end in mind.” 

ELEMENT #3 – Understand who has the best system in place 

By clearly defining a business capabilities chart upfront, then doing an assessment of which organizations have the best capabilities in place, everyone benefits. Remind yourself that for 1 + 1 to be greater than 2, you need to seamlessly integrate the best of both. 

ELEMENT #4 – Prioritize agility and flexibility 

As Mike Tyson famously once said, “everyone has a plan until they get punched in the mouth.”  Once you get started, you’ll learn new information and will need to adapt your plan.  If you can set the expectation that agility and flexibility are key components of an integration, this gives people permission to let go of pre-conceptions, embrace change quickly, and smoothly transition to the best version of the “new normal” with speed and excellence  

ELEMENT #– Beware of overloading IT 

During a typical integration period, the IT department tends to absorb a very heavy load of the “asks”—because of technology’s integral role in the process. Make sure there is a system in place that enables communication between integration leadership and IT to avoid the mistake of overloading them. 

ELEMENT #6 – Communicate clearly, early, and often to employees 

One of the biggest mistakes made is that acquirors try to let things settle for a while before they begin integration activities.  During any major shift of change, people are often fearful of what this means for their personal and professional futures. By offering insight into what is happening immediately after you close your transaction and sharing what will happen, even if it’s not what they want to hear, employees can embrace an integration with less trepidation. Be sure to promptly follow your communications with aligned actions.   

ELEMENT #7 – Lead by example 

This should probably be #1 (and likely goes without saying), but leadership is ultimately responsible for the success or failure of an integration. Acquisitions have a unique ability to either make or break a company.  If you’re in a leadership role, don’t pass off important steps of the process to lower-level managers, particularly with more nuanced or difficult changes. Lead by example and show that you have bought into the task at hand by holding others and yourself accountable for the outcomes.  Make acquisition integration part of your leadership meetings and make sure the buck stops with a key leader in your organization who can catalyze buy-in and action.   

Check out the case studies on how we’ve helped clients connect with the merger integration experts that are right for them here and here. And as always, if you have an immediate need we can assist with, contact us and one of our team members will be with you immediately.