How to integrate an acquired company -- in just 90 days

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It sounds impossibly fast. But Avnet Inc.'s M&A playbook allows it to bring acquired companies into the fold (including IT systems) with "deliberate speed" -- usually within 90 days -- as well as with sensitivity to the human cost.

Avnet CIO Steve Phillips explained the process in a breakout session at Computerworld's Premier 100 IT Leaders conference today. Avnet is a Fortune 500 technology distributor that has grown via numerous (65+) acquisitions, including three just last year.

Phillips likes to say that Avnet has a lot of experience with acquisitions and knows a lot about how to make them work -- but still learns something new each time.

The key is an M&A Playbook -- actually a SharePoint site, not a book -- that acts as a repository of what Avnet has learned along the way. It has checklists, templates, processes and best practices for all parts of the business, with a particularly thick section on IT integration. What works, what doesn't. Chronologically, the playbook moves from early due diligence -- the key questions to ask -- to the post-integration review at the end. Phillips said you have to make a strong commitment to "document your tribal knowledge," and then update the playbook after each acquisition.

Phillips said Avnet has integrated acquisitions as fast as two weeks (for a small company) and has taken as long as six months (its most challenging case). But the goal is 90 days.

Why so speedy? To avoid the "deep freeze," in which a drawn-out process is a major drag on productivity and resources. (Plus, Avnet wants to minimize the amount of time the two companies are acting differently, on different IT systems. It also wants to avoid paralysis by analysis.) Besides, faster integration means faster returns, faster synergies.

The IT integration work begins before the deal is announced. Once it looks like the deal is likely (a phase he called "deal heat"), the CIO is included as an equal partner among the other senior execs and helps assess the complexity and synergies of the deal under consideration. For example, it's important to know that customer data from the acquisition target company can be uploaded to Avnet's systems. The SEC doesn't allow sharing of sensitive competitive information (like customer and pricing data) before the deal is announced, so Avnet uploads dummy data in advance to make sure it can work.

A key element of Avnet's M&A strategy is to "ease the pain" of the people involved, Phillips said. "It's really important to be respectful and humble," when communicating with the acquired company's employees, he said. They want to know "What's my future: Will I be with this company or not?" Phillips gets both IT teams together, and determines which IT employees will be in the "go-forward organization" and which ones will be in the "transition organization." The latter is a temporary post and those employees will be leaving once the integration work is done. "People want to know their futures," without delay, Phillips said.

Ultimately, "We pick the best of the best" people, Phillips said, regardless of which company they come from. In other words, Avnet will retain the best IT employees from the acquired company. Phillips himself came from Avnet's acquisition of Memec in April 2005. He had been Memec's CIO.

The same pick-the-best principle applies to IT systems, practices and processes. Phillips said Avnet will aborb applications and practices from the acquired company that are superior to its own.

Check out this video of Phillips offering his five best tips for M&A integration.


Copyright © 2011 IDG Communications, Inc.

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