Ready for M&A Scaling? Key Considerations for Operational Success

In our last blog, we highlighted six problem statements that may signal the need to re-evaluate your Backoffice processes and systems. Today, we delve into the first of those statements: “Are you ready to scale through acquisition?”

More specifically, can your Backoffice handle the scalability demands that come with an acquisition. The whirlwind of the first 100 days post-acquisition underscores the importance of this question.

Let’s explore the essential factors to consider:

1. Establishing a Blueprint for Success 📶

Having a well-defined process blueprint is more than a map; it’s your compass for navigating the post-acquisition journey. When two organisations unite, their distinct processes can breed confusion and inefficiency.

A “best practice” process template allows for rapid identification and streamlining of redundant or conflicting procedures, ensuring a smoother transition and faster realisation of synergies, a game changer in those critical first 100 days. Especially concerning data, understanding your operational “Must-Haves” and reporting essentials can significantly reduce the need for extensive data restructuring post-acquisition. Yet, here’s the caveat: understanding how the new business operates is paramount. Some processes may not neatly fit into your blueprint, but some may even enhance it – try not to let “we know best” override common sense – one sure-fire way to frustrate your new teams. Flexibility and adaptability are key. While the temptation to deal with challenges as they arise is valid, consider the benefits of defining your blueprint in advance of an acquisition. It’s a busy time, but it’s worth the effort.

2. Preparing for Scalability Challenges 💻💰

Scalability reigns supreme in M&A. So, can your systems handle an influx of new users and data, and at what cost? If they can’t, you risk bottlenecks, performance dips, and soaring costs. Understanding your technology stack’s scalability is key to planning for the bringing together of companies.

Often, we find investment backed companies in their initial cycle still rely on free or in-house built systems. While these have served them well as nimble founder-led start-ups, they can start to hinder rapid scaling. Caps on User licenses, unplanned pricing spikes moving between tiers, or overly customised configuration can suddenly become serious scaling concerns.

The worst-case scenario? Your tooling can’t scale. Though for some systems, it’s a simple click for your Account Manager to increase licenses or data allowances, but even in those moments, you’re likely not in a position of power, out of your renewal period, the impact on your bottom-line can be significant.

So, it’s about ensuring your systems can match your growth plans and budget, a critical but often overlooked aspect of staying agile and cost-effective as you expand.

3. Minimising Manual Inputs 📝

What happens when manual inputs are the lifeblood of your operations? Many have witnessed the scenario: a lone “guru” holds the sacred knowledge of that one critical and lengthy process or system. They work late into deadline days, ensuring the business receives their uniquely crafted data. Their expertise is priceless, but it’s crucial to recognise that gurus and their processes aren’t easily replicated nor scaled. Manual processes not only devour precious time but also open the door to human error, financial discrepancies and operational snags. As you grapple with the complexities of M&A, the sheer volume of data and tasks can skyrocket. What once required a single individual suddenly becomes a recipe for bottlenecks and burnout.

The solution? Embrace automating and digitalising core processes to slash these risks while turbocharging scalability. Your gurus will appreciate the change, and your business will thrive.

4. Adapting for Multi-Product/Service Offerings 🌋

Expanding your product or service portfolio through M&A unveils new market opportunities. But, before embarking on any transaction, a thorough understanding of the Target’s products and services is needed.

While the initial focus is on assessing for alignment with your long-term product strategy, it’s also vital to evaluate the readiness of your own system setup for this strategy and identify a systematic approach for integrating the Target’s offerings into it. Sometimes, the system synergies you envision may not be easily realisable. While system flexibility alone might not halt a transaction, it can significantly impact operational efficiencies and result in laborious manual processes as you work to “make it fit.”

Ask yourself: Can we replicate how they currently sell & process their offering within our systems? Do we want to replicate it exactly, or should the structure of selling change to match our own?

Ensuring your technology infrastructure is nimble enough to accommodate diverse products or services sets the stage for a smoother transaction, unlocking the full potential of diversification through M&A.

To Conclude

In conclusion, preparing Operationally for M&A scaling is crucial for a successful transition. Establishing a blueprint to execute on, planning for scalability, reducing manual inputs, and having adaptable systems & processes are key steps on this journey.

It can be difficult to take the time for some of these activities in the buzz and urgency of an M&A transaction, therefore, it’s ideal to start thinking about these areas during the first year of an initial cycle.

Who are 1801?

We enable Scale-up success, by enhancing value creation through the design and implementation of end-to-end systems & process.

#The1801ConsultingGroup #DigitalTransformation #MergersAndAcquisitions #BusinessStrategy #ValueCreation #ScaleUp