Closing & Day One
"Closing" refers to the date when the SPA (Sales Purchase Agreement) comes into force and ownership of the Target transfers from seller to buyer. This is commonly called ‘Day One’, as it is the first day that the Buyer is the owner of the acquired operation, or that the operations work as one legal entity. This is when the integration of the companies, or alternatively, the emerging operations starts.Three important concepts that managers must focus on during this critical time are:
- Operative structure
- Systems & controls
Good communication is the way to build trust, develop motivation and share important information. Well-planned and well-implemented communication enables managers to lead an M&A project more effectively. It can prevent the negative impact of rumors and help to unify different parts of the joint company.
If there is a long delay between the original announcement and the closing of the deal, important elements may need to be communicated again to personnel and other stakeholders. At this point, stories about new key individuals and product and service material from the acquired company can be used to enhance the message.
Clear communication about the new management and operational structure/reporting procedure is required from Day One. If this information is not available, or is poorly communicated, there may be a tendency for personnel to follow their familiar habits. Initiating change later on can be very difficult.
When personnel changes are planned, HR should play an important role. In order to support the management in structural planning and in choices for managers, their teams and future staffing, HR must understand the company strategy.
Systems & Controls
Continuation of financial and sales reporting is crucial for management to be able to control the operations of the Target and the progress of integration. It is recommended to have clear and detailed instructions with ready-made forms and templates available to the acquired entity’s financial team on Day One.
- Closing & Day One
- Kicking off the Integration
- Engaging C-Suite
- Measuring Performance
- Incorporate Lessons Learned into Your Playbook