by Henry McNeil

Day 1 Activities: Don’t Wing It, Plan It!

Introduction:

• It sounds easy. We have put all this effort into buying a company and there is very little time left. People will understand how busy we are. We just need to have a quick chat to the newly acquired employees and we will visit them when we can get around to it.
• Well, no. To use the adage, ‘you never get a second change to make a first impression’. Your new employees may never forget how good or bad your welcome may be.
• This may well be one of the most important days of your business life, when taking responsibility for the profit, liabilities and risks for an additional business. It is better to start off on the right foot and build a long-term relationship for the future. But not only with your communications to employees, you need to tell customers, suppliers and partners.
• With regards to liabilities and risks, there are aspects where you need to take control immediately to protect your investment, whether it be cash, cyber-security or revenue.

What’s at risk by ignoring this?

• Potential loss of revenue or increased risk by not taking control of finances or fraud management activities.
• Poor or inconsistent communications and activities across the business, which will have an implication on employees’ confidence.
• Acquired employees can gain the wrong idea - that non-aligned or sub-standard practices can continue and no change will be expected.
• Employees from all parts of the business left confused, hurt and / or lacking direction. Lack of a communicated, shared vision can bring long term damage and disillusionment.

Your Day 1 Due Diligence and Strategy:

• On the transaction completion date, you will take control for all aspects of the acquisition, including profits, liabilities and risks. Even for a small, straight-forward acquisition, a strategy and a plan are essential to get it right and ensure all aspects are covered. Consider holding a workshop to capture all the necessary activities and who is responsible for them.
• Start by defining the desired outcome for the Day 1 transition – who needs to be told and where you need to gain control.
• While carrying out Due Diligence, identify areas where you need to take control of the acquired business immediately. Consider your newly acquired risks: finance, fraud, treasury, operations, IT and cyber security are the usual suspects. The Due Diligence reports should help you.
• On speaking to people in the target business during due diligence, think about the positioning and type of communications that will achieve their support and the buy-in you so desire.
• Communications will need to be tailored to different cohorts – employees from both acquirer and acquired businesses; customers; suppliers; partners; media; etc.
• Now is the time to start planning the integration meetings and plans and inform all employees of your intentions on Day 1.
• Consider the launch of new branding, customer and employee welcome packages; website refreshes etc.
• Where appropriate, appoint someone to act as the coordination point for Day 1 activities, to collect progress, re-plan activities that were not completed and connect with the people who were not contacted.

Your Day 1 Activities:

• This is the first day of the 100 Day Plan, starting with immediate communications to all parties; functions where control needs to be quickly gained and what is expected from employees during this period.
• Identify all employees who need to receive communications regarding the acquisition. Attempt to contact as many employees as is practical on the first day. While face-to-face is ideal, you can also make use of conference call facilities. Planning and timing will be needed for multiple locations, as well as for employees who work from home and across different time-zones.
• In the areas where control needs to be gained, identify the subject matter experts and line managers who need to be approached on the first day and told / advised what to do.
• Identify the Subject Matter Experts (SMEs) who will need to contribute to deeper analysis so you gain a deeper understanding of how the acquired business functions. Start preparations for workshops to share knowledge to bring the two businesses together.
• Arrange the first business Integration meeting as soon as practical - even on Day 1 - to demonstrate your impetus as buyer.

Your Day 1 Communications:

• This is the day you have been waiting for. You are now responsible for all those people in the newly acquired business. They will be keen to see what you have to say and how it will impact their working life. Everyone will immediately be wondering whether they have a future in the combined business, resulting in some being protective of their work.
• Start by thinking what you expect from your newly acquired employees and what they are expecting from you.

These are the communications that need to be considered for all parties, so there is the need to develop a checklist, speech or presentational materials.
These can include:
Employees / contractors:

• State what is expected of employees. Address incentives, redundancies and job duplication fears
• Start to communicate the desired culture
• Branding, image look and feel changes
• Details of the 100 Day Plan, integration activities, governance and key performance indicators
• Present the new management team and new business model
• Rationale, synergies and economics of the acquisition

Acquired employees / contractors

• What to expect from the new owners

​Incumbent employees / contractors

• The changes they can expect
• Make acquired employees welcome
   
• Specific teams may need to be treated more sensitively than others and it is good practice to have a separate presentation for them away from the others
• Prepare for any customer, supplier, media and shareholder communications. Public Relations may need to be involved to make the best impact. Consider developing formal letters
• Communications to major partners, such as outsourcers, who may feel their relationship is under threat
• Make plans to visit the acquired locations for face-to-face contact
• Schedule further updates about the acquisition and integration activities
• Consider developing FAQs for employees so they have a reference document with whom to contact. (If the merger is news or a surprise to them, some people do not retain information during times of stress.)
• Remember remote workers – Include them in a conference call.
• Try and keep track of attendees. Consider how to inform those on holiday, sick or otherwise unavailable.

Gaining Control on Day 1:

• The critical business functions / assets where you need to gain control to protect your newly acquired financial situation, employees and assets. The key items that need to be brought under the acquirer’s control include:
  • Finance: – especially where there are concerns or a distressed business is being acquired. Consider banking and bank accounts; treasury; payroll; payments to taxing authorities and tax / regulatory filings
  • Fraud: – Consider both internal and external threats; staff, processes and applications. Has there been a history of fraud? Consider credit-card processing; manual cash handling; international payments; anti-money laundering and bribery
  • Operations: – How should employees, such as call centre employees, greet customers and is a change in approach urgently needed? Consider physical security; telephony; customer help desks.
  • IT: – Investigate immediate changes to email domains; telephony; websites etc
  • Cyber Security: – Ensure external threats are being addressed. Has there been a history of cyber-attacks and an inability to deal with them?
• You will need assistance from the finance, operations and IT functions. During the comparisons between the two businesses, you may find that the acquired business may have better protection than that of the buyer.

To conclude:

• Preparing for Day 1 activities does feel straight-forward – until you start thinking about it. You will want to leave all those employees, customers and suppliers with your vision for the future and the assistance you are expecting.
• It may be the time for tough decisions such, as redundancies or office moves. Triggering these difficult activities will start to generate the impetus you need.

Author: Henry McNeill:

To keep up with the latest innovations in post-acquisition integration, please contact Henry McNeill at henry@computerbright.co.uk.

Henry has held board-level and senior execution roles during major, post-acquisition projects. Focused on technology and data driven businesses, Henry provides advisory and M&A services to companies embarking on their first or fiftieth acquisition. He has developed a range of tools and techniques to ensure value is captured and increased post-sale.