A company acquisition, in which one business buys another, typically brings about a unique set of challenges for both firms. Understanding these hurdles and the right steps to take is necessary for successful outcomes all around.
A solid acquisition process should entail aligning the move with long-term goals, identifying feasible target companies via thorough research, valuing the target company to determine financial requirements, engaging in negotiation and due diligence, ensuring regulatory compliance, and finally, integrating the new company into extant operations.
Acquisitions can drive growth, encourage cost efficiencies, diversify company offerings, increase access to talent, and enhance competitiveness. But they can also pose financial risks, present cultural integration and regulatory dilemmas, and necessitate additional performance management.
Comprehending and being ready for what lies ahead is part of solid acquisition preparation. It will ensure smooth integration of operations once the two firms become one. It will also help mitigate risks, such as overpaying for the target company, encountering legal or regulatory problems, and managing cultural discrepancies between teams.
Perhaps most importantly, a solid understanding of likely acquisition challenges lets entities make the most informed decisions possible and fully leverage the intended advantages of the move.
As the late Don Scales, CEO of communications firm Investis Digital, told software firm Lattice in 2021, “When businesses don’t take [acquisition-related] challenges seriously, the results are predictable: an exodus of key talent, an erosion of morale, and, eventually, the loss of customers and clients.”
Indeed, during an acquisition, one of the most common problems to arise relates to staff (the other is software-system compatibility). Facing acquisition challenges head-on is vital to minimizing work stoppages and other operational disturbances, and will help keep productivity high during the acquisition process.
As a firm does its due diligence prior to the acquisition, it should evaluate the target company’s staffing structure and note any potential problems. Key strategies for addressing staffing challenges are:
For optimal software integration during an acquisition, the acquiring firm should fully assess the target company’s systems, particularly its electronic data interchange platform. Some of the best ways to ensure seamless EDI integration include:
Below, we detail some methods to minimize disruption and keep productivity high during an acquisition:
An acquisition’s impact on staffing and employee morale can be significant. Some considerations and best practices for managing staffing integration challenges during an acquisition are:
Software integration–particularly EDI–plays a critical role during the acquisition process. That’s why it’s important to assess the compatibility of the two entities’ EDI systems, as well as the systems’ scalability and reliability. Remember to look for gaps and possible future EDI-related challenges, too.
EDI is crucial during an acquisition because it enables the easy flow and synchronization of data between the acquiring and target firms. This ensures business-process continuity, promotes good supply-chain management and enables efficient operations.
A detailed integration plan, thorough testing and validation, comprehensive training and support for future users and close monitoring of system performance will all go a long way toward keeping productivity up and disruption down during acquisition.
Key considerations for successful EDI integration
The successful integration of two entities’ EDI platforms requires careful consideration of compatibility, reliability and scalability. Evaluating the companies’ EDI infrastructure will help identify any potential challenges and gaps in system functionality.
Data-format standardization, compatibility with trading-partner systems and integration capabilities with existing software programs should all be key considerations. Meanwhile, scalability and reliability will prove critical to uninterrupted operations and the accommodation of future growth.
Managing the EDI transition and optimizing productivity
Develop an integration plan that outlines the necessary steps, deadlines and responsibilities involved. The new EDI system will require thorough testing and validation and staff will need comprehensive training and support. System performance will benefit from close monitoring during the transition so any problems that arise are fixed right away.
Recognizing potential risks is another important part of a smooth acquisition process. Common hazards include overpaying for the new company, legal and/or regulatory challenges, cultural ‘clashes’ and operational disruptions. But the acquiring entity can take steps beforehand to mitigate risk. These steps include:
The acquisition of a business can be a financial boon, but it can also bring obstacles. Among these are strategic planning, adaptability, effective communication, and integration of software (specifically EDI).
Strategic planning helps ensure alignment with long-term goals, while clear, open communication with staff promotes a positive, efficient work environment for all. Adaptability allows companies to overcome hurdles and adjust their strategies accordingly. And smooth software integration–particularly of EDI platforms–is important for maintaining an uninterrupted flow of business-critical information.
For the most efficient possible operations, top decision makers should prioritize these elements at the start of any acquisition.