Buyer-Seller Alignment:
What to Set Before Onboarding

Transcript

Hi, I'm Alicia Chandler, President of Oak Street Funding. Today I'm going to be answering some frequently asked questions about post acquisition alignment and what buyers and sellers must address before integration. Some things I'll be covering today are where early misalignment tends to appear, difficult conversations that need to happen early, what steps are often overlooked, and more. 

What expectations should buyers and sellers define before integration begins? 
Buyers and sellers should clearly define expectations before integration begins to ensure transparency, alignment and a smooth transaction. Looking at service continuity and transition, there needs to be a focus on client communication, establishing protocols for notifying clients, addressing concerns and ensuring retention. Transition plans looking at a step-by-step process for migration of accounts, contracts and ongoing operations. IT and data Migration what are the expectations for transferring technology data and accessing credentials securely? With respect to staffing and management, have you done an identification of key employees and retention? Clarify the treatment of current employees retention strategies and key managements and contracts. Document roles and responsibilities. Document your expectations for improvement during and after transition. What are key milestones? Define your KPIs or key performance indicators for the transition success such as client retention, employee retention and regulatory approvals. Review: Process Identify the cadence and format of progress reviews during the transition. 

Where does early misalignment tend to appear first? Strategy, leadership structure, day-to-day operations, etc.
Early misalignment can appear in several places. Strategy and vision are one of those. The buyer's strategic intent, whether it was growth, consolidation or new markets, might differ from the seller's historical direction and client promise. Another area is product or service priorities. Misalignment can arise when the acquiring firm favors certain products or services or ways of doing business that the target firm views differently. Leadership Structure and Management Roles: Sometimes there's conflicting expectations around which leaders stay, who goes, who leads the client relationships and who designs post acquisition. Strategy Cultural and Values: Looking at divergence in leadership styles and organizational values can surface in the C suite and impact day to day discussions between management. There can be misalignment with respect to day to day operations. Look at client management. There could be a misalignment in handling communications with clients or transferring accounts and maintaining the service standards. Process Integration: There could be issues in workflow alignment, technology adoption and compliance routines that can manifest quickly. Employee roles is another area. If there are unclear expectations about roles, retention and responsibilities that can trigger confusion and morale can dip. 

How should both sides define success for the first year post close, beyond just financial success? 
Defining success for the first year post close in an acquisition should go far beyond financial metrics. A holistic set of criteria ensures strategic, operational, cultural and and client focused integration. Let's look at a few items. Client retention and satisfaction retention of clients is key. You have to look at the percentage of clients retained after integration client communication. You need to ensure a smooth transition and be proactive with your clients with proactive outreach and minimal disruption to their day-to-day operations. Client satisfaction can be measured several ways. Can do client surveys or net promoter scores which reflects the trust and satisfaction, employee engagement and retention. You need to identify key talent retention metrics and looking at if you've retained key management and operational staff as well as the employee satisfaction. Looking at surveys, pulse checks or engagement scores. Another key metric is cultural integration. What is the progress on merging company cultures? Also looking at operational integration, how successful has the transfer or integration of IT data and workflow systems been? Process management is also another area. The adoption of best practices that cause minimal disruption in service delivery to clients is key. Another important metric is strategic alignment. Looking at your milestones, have they been achieved? Look at the progress towards the new strategic goals that have been made. Communication. Has this been clear and consistent messaging among the stakeholders and your clients? Leadership collaboration. Has there been effective joint management with minimal disputes or turnovers? Looking at brand and reputation maintenance. Has there been any impact on your brand? Monitor your reputation. Risk managing stakeholder perceptions which can be done online or via surveys. Another area is innovation and growth. Have you launched new products? Have your service offerings expanded? Digital transformation has there been progress or modernization of digital first technologies? There are several areas that must be addressed to ensure better alignment moving forward. 

What difficult conversations need to happen early to avoid friction later and allow for better alignment? 
First and foremost is the strategic vision and direction. Where are we headed? You really need to discuss and reconcile the expectations for the firm's future direction, growth, ambitions and market positioning. What changes are anticipated? Address whether the core services, client segments or brand will evolve post-acquisition. Another difficult topic is leadership and key talent. Who stays, who goes, who leads? Agree on which leaders will play ongoing roles, who will have final decision-making authority and any planned departures. Succession planning is also another critical item. Discuss plans for critical talent, retention and leadership. Succession, Cultural differences and integration must also be looked at. How are values and norms being merged? Tackle those differences in the company culture, operating styles, norms and how they'll be bridged. Also, are there any non-negotiables? Identify sacred values or practices that must remain? Client handling and communication. How will clients be notified and reassured? Moving forward? Discuss the timing, messaging and roles in client communication to prevent confusion or attrition. How will we respond to client concerns? You need to agree on a unified response to any issues or objections. Employee communication and support what will employees hear when and from whom? Map out a transparent internal communication including how uncertainties and changes will be explained. How will retention incentives and layoffs be handled. Addressing these potential impacts with staff early and honestly makes a huge difference. Operational Integration the thinking about which systems and processes will change and when. Discuss technology migration, workflow changes and potential service disruptions. Also, what are the contingency plans if things don't go smoothly? Proactively address how issues will be managed. Financial Expectations and Metrics what does success look like financially and beyond? Clarify your financial targets, milestones and the importance of non financial achievements. How will unexpected costs or missed targets be managed? You need to decide on approaches for handling surprises and shortfalls. 

How can firms align team and staff expectations during a transition, so employees feel clarity, not uncertainty?
Aligning team and staff expectations during a transition is critical for maintaining morale, productivity and client confidence. Make clarity a priority. Communicate early, directly and often. Address both the big picture and the individual impacts. Empowering your employees and not leaving them guessing. You have to have transparent, timely communication. One way to do that is through regular updates. Communicate the timelines, the milestones and the reason for the transition early and often. Leadership visibility must also be key. Have senior leaders address staff directly to explain why, what and how. Also, you should enable question and answer sessions like town halls and other feedback mechanisms for employees to express concerns and get answers. There also needs to be clear roles, responsibilities and organizational structure that can be done through charts and maps that you can share updated organizational charts with their staff and clearly define new reporting lines especially for roles that will change. Another important point is having written job descriptions. Provide any revised job descriptions as soon as possible for any affected staff. Also, role retention versus Change clearly state who will remain in the role, who will see changes and how those decisions will be made. With respect to integration plans and timelines, you need to develop a step-by-step guide which gives employees a roadmap for integration so they know what to expect and when. Finally, Training and Support Provide training sessions for new systems, policies or procedures introduced during the transition. 

What alignment step is most often overlooked before integration gets started?
While companies discuss big picture strategy, leadership structure and financial metrics, they frequently neglect to clarify the day-to-day operating model, how decisions will be made, who will own which processes and how the priorities are set within the merged company. The more aligned both sides are before onboarding begins, the easier it becomes to build momentum once the deal moves forward. Taking time up front can help avoid confusion later and create a stronger foundation for long term success. Thank you for watching and we wish you success in the year ahead.