\u201cWe're not starting the integration yet. There are more add-ons in the pipeline, and we'll know more in two months.\u201d This \u2014 or something similar \u2014 is what many CEOs pursuing a buy-&-build strategy are currently saying.<\/p>\n
Although some add-ons have already been acquired, further takeovers are still pending. If you begin integration now, how will you handle the next acquisitions? The first integration isn\u2019t even complete, and the next closing is already imminent.<\/p>\n
One option is to integrate the new acquisition alongside the ongoing process. Another is to put the company on hold for now. But if you start too early, you won\u2019t be able to incorporate insights from future acquisitions into the process.<\/p>\n
\u201cSo it makes no sense to start now.\u201d Right? In the end, you just keep waiting \u2014 until the day after tomorrow.<\/p>\n
Buy-&-build strategies have become an integral part of many private equity investments. No wonder \u2014 the low-hanging fruits are particularly rock bottom here. However, this no longer refers to the classic multiple arbitrage that once seemed almost automatic: larger company, higher multiple.<\/p>\n
It was a self-reinforcing effect, almost like a perpetual motion machine or a sleight of hand. Today, that alone is no longer enough. To increase the multiple now, real integration is required \u2014 leveraging synergies within the growing organization. Without a targeted allocation of resources, the desired effect won\u2019t be achieved. Yet, despite the additional effort, the investment is worthwhile.<\/p>\n
This raises a crucial question: When should integration start? And when new companies are continuously being added, how can they be incorporated into an ongoing integration process?<\/p>\n
But buy-&-build strategies aren\u2019t the only path to multiple acquisitions. Traditional growth strategies today also rely on both organic and inorganic expansion \u2014 such as add-ons, where suitable companies are acquired. And often, these involve more than just one or two.<\/p>\n
Even companies that aren\u2019t actively pursuing expansion face this challenge. Demographic trends are creating numerous succession opportunities that are hard to ignore. Failing to seize them means risking that a competitor will \u2014 gaining a decisive advantage in the process.<\/p>\n
And suddenly, you've acquired several companies in a short period \u2014 and once again face the same question: When does integration begin?<\/p>\n
The situation is clear: the first integration is already underway, and another target is being added. There are two basic options: either the new company is integrated directly into the ongoing process, or the initial integration is completed first while the new target remains on hold until it is incorporated in a second phase.<\/p>\n
So far, so difficult. Parallel integration speeds up the process but risks compromising its stability.<\/p>\n
Corporate culture, for example, can be a critical factor. Even with the first acquisition, there were significant differences from the buyer: We\u2019re on a first-name basis versus We\u2019re not. Now, a third player enters the mix \u2014 with a completely different culture. This new addition prioritizes clear responsibilities and hierarchies, regardless of how people address each other.<\/p>\n
In the original integration, cultural differences were still manageable \u2014 they existed along a single dimension. But with the addition of another company, complexity increases: Who represents which culture? And in which direction should the entire organization evolve?<\/p>\n
Choosing stability by postponing the second integration means also losing valuable opportunities.<\/p>\n
Take IT, for example. As part of the integration, the entire application landscape is under review. A key decision looms: selecting a Manufacturing Execution System (MES) to replace the existing production planning system. Neither the buyer\u2019s solution nor the first target\u2019s system is ideal, but a choice must be made for integration to move forward. The decision falls in favor of the buyer\u2019s system.<\/p>\n
However, the second target successfully implemented an integrated MES just a year ago. They have valuable operational experience, identified optimizations, and documented everything thoroughly \u2014 after all, they\u2019re the ones with clear structures and hierarchies.<\/p>\n
Had this expertise been incorporated early on, the system could have been further improved and developed into the best possible solution. But with a sequential approach, the buyer\u2019s suboptimal system is chosen simply because time and money have already been invested in its migration. Making changes now seems unrealistic.<\/p>\n
More stability \u2014 at the cost of speed and quality.<\/p>\n
The choice between parallel integration \u2014 offering speed and flexibility at the expense of stability \u2014 and sequential integration is anything but trivial. And even after a decision is made, integration remains a balancing act.<\/p>\n
A classic buy-&-build strategy simplifies decision-making. A solid platform company with stable, efficient processes serves as the foundation for consolidating a highly fragmented market by acquiring significantly smaller companies. The platform company\u2019s target operating model is simply adopted as the standard.<\/p>\n
With a well-defined playbook outlining each step of the integration, multiple targets can be integrated in parallel\u2014without unnecessary risks. Processes can also start at different times. Such a playbook details the objectives and the required measures, structured by topic or function.<\/p>\n
Careful preparation or documented experience from previous integrations helps establish realistic time frames, dependencies, priorities, and milestones. These milestones \u2014 which can also serve as internal communication tools or mark key events \u2014 might include a completed rebranding, the start of production, or the acquisition of new customers.<\/p>\n
One of my favorite examples is Mister Car Wash, a U.S. chain of conveyor car washes. Mister \u2014 as the company affectionately calls itself \u2014 expands almost exclusively by acquiring individual locations or small chains. Each integration follows a standardized playbook, covering everything from site conversions to employee training in the company\u2019s own academy.<\/p>\n
Similar playbooks are common in hotel (re)openings. In addition to the playbook itself, specialized (re)opening teams often assist local staff during the initial phase. Their support spans both content \u2014 since they know the target vision and playbook inside out \u2014 and operational aspects, providing extra hands to tackle unexpected challenges.<\/p>\n
A clearly structured roadmap creates space to accommodate the unique aspects of each acquisition. There are always valuable best practices that can be adopted across the group, which are then rolled out and incorporated into the playbook.<\/p>\n
Because playbooks are not set in stone. They are regularly updated \u2014 not completely overhauled, but continuously refined with lessons from the latest integration processes.<\/p>\n
What about the other end of the M&A scale? When there\u2019s neither a playbook nor extensive post merger integration experience? When the target picture for the new organization isn\u2019t defined from the outset but instead develops throughout the process? Can another acquisition still be meaningfully involved in an ongoing integration?<\/p>\n
Of course. After all, regular status or steering committee meetings provide a forum for discussing integration progress with key stakeholders. These meetings determine whether the future will follow the yellow or green variant. Representatives from the new acquisition should be involved early on \u2014 they, too, are relevant stakeholders.<\/p>\n
Decisions already made regarding the target vision don\u2019t need to be immediately applied to the new acquisition; that can happen in a second phase. However, their input can be incorporated early, offering two key advantages.<\/p>\n
First, the new target feels included from the very beginning. Its expertise and experience contribute to the process rather than being overlooked. At the same time, it gains direct insight into the organization\u2019s direction, ensuring transparency in the integration process.<\/p>\n
Second, valuable insights from the new acquisition aren\u2019t lost. Returning to the earlier example of selecting a Manufacturing Execution System (MES). Instead of being limited to two suboptimal options, the new target may introduce a superior solution \u2014 one that can be incorporated into the future IT landscape.<\/p>\n
This approach may even unlock additional internal resources. Instead of relying on costly interim managers, underutilized talent from the new target can support the integration. This not only reduces costs but also creates direct points of contact, helping the organizations grow together more effectively.<\/p>\n
Even if the real integration of a new acquisition is postponed, Day One still happens. It marks the day after closing when the buyer takes full control of the company. On this day, employees expect a warm welcome, an inspiring speech from the CEO, and clear guidance. (I shared my experiences and thoughts on this in my last article.)<\/p>\n
Whether the new company is integrated immediately or later, this milestone cannot be overlooked or handled half-heartedly. It deserves the same careful preparation and serious execution as any other key moment in the integration process.<\/p>\n
As is often the case in life, there is no perfect solution \u2014 especially when evaluations must be made in advance. However, the two extreme cases outlined here provide guidance and reference points for your own very specific situation.<\/p>\n
Many roads lead to Rome \u2014 and to a successfully integrated organization. More important than choosing the perfect approach is making a clear decision and following through consistently. After all, postponing integration until the day after tomorrow means losing valuable time.<\/p>\n
As long as the new acquisition isn\u2019t treated as second-class, employees are informed transparently and authentically, and they are involved as much as circumstances allow \u2014 everything will work out.<\/p>\n
And if it is not yet good, then the integration is not yet over.<\/p><\/blockquote>","protected":false},"excerpt":{"rendered":"
Warten bis zum Sankt-Nimmerleins-Tag \u201eJetzt starten wir noch nicht mit der Integration. Es stehen noch weitere Add-ons in der Pipeline. In zwei Monaten wissen wir mehr.\u201c \u2013 So oder so \u00e4hnlich klingt es derzeit bei vielen CEOs, die auf eine Buy-&-Build-Strategie setzen. Zwar wurden bereits einige Add-ons akquiriert, doch weitere \u00dcbernahmen stehen noch aus. Wenn […]<\/p>\n","protected":false},"author":3,"featured_media":3000,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[40,54],"tags":[59,52,46],"class_list":["post-2999","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insight","category-newsroom","tag-buy-and-build","tag-pmi","tag-post-merger-integration"],"_links":{"self":[{"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/posts\/2999","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/comments?post=2999"}],"version-history":[{"count":1,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/posts\/2999\/revisions"}],"predecessor-version":[{"id":3001,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/posts\/2999\/revisions\/3001"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/media\/3000"}],"wp:attachment":[{"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/media?parent=2999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/categories?post=2999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hardt-group.com\/en\/wp-json\/wp\/v2\/tags?post=2999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}