Your Deal Has Closed. Now What?

Transaction Advisory: Post-merger integration

In this blog, we delve into a critical phase of the private equity world: post-merger integration. From aligning cultures and teams to streamlining operations, we’ll explore the strategies and best practices that pave the way for post-merger success. Whether you’re a seasoned executive leading a merger or an employee navigating organizational changes, our Transaction Advisory team can be your strategic partner, offering insights and actionable tips to navigate the post-merger and acquisition (M&A) landscape with confidence.

Strategy

Risk Management and Mitigation

Diligence often concludes with a punch list of priorities that translate to actions. After close, it is crucial to take action and identify potentially unanticipated issues. Whether an initial purchase or add-on to an existing platform, the first few months post-close provide the opportunity to evaluate and stand-up programs and identify skilled leaders that can carry your new business forward. This includes evaluation and implementation of necessary environmental programs, not only to reduce risk, but also to create value through a unified approach to managing environmental, health, and safety (EHS) matters.

Assessing existing programs and gaps is standard diligence; developing and implementing programs to plug gaps is often neglected in the EHS space. However, ensuring the right team and approach to EHS matters is arguably as critical as selecting the right executive teams when it comes to establishing and supporting culture. It is important to understand how your new organization fits into your current business portfolio. Do you have similar programs and companies already? Our Transaction Advisory team can engage with you, both during the due diligence process in the pre-close phase as well during this post-close stage.

Communication and Stakeholder Management

At Montrose, we help bridge the gap by building trust between business leaders and the operational team (boots-on-the-ground), an essential element to any deal. As a trusted advisor, we can serve as partners in these relationships, helping investors and stakeholders understand what is occurring at the operational level. As M&A communication runs in both directions, it’s crucial to translate field data into relevant business terms, providing direction for your stakeholders and management teams. Our seasoned professionals can help demystify the process and build successful teams.

People

Employee Retention and Culture Alignment

During the due diligence process, it is important to look holistically at a firm’s ESG programs, including strategies and programs relating to human capital. These often include initiatives and commitments related to employee engagement and retention, underpinned by policies and other governance mechanisms. Cultural clashes may arise such as a culture of responsibility, accountability, and safety – this is where we can help with trainings, audits and developing programs. Our Transaction Advisory team can empower companies with the knowledge and answers to employee retention and culture alignment post M&A.

Infrastructure

Operational Integration and Synergies

Identifying infrastructure needs and gaps in regulatory compliance such as air emissions control, wastewater management, chemical storage, and containment is imperative during due diligence. These conditions, if unaddressed, have the potential to interrupt business and earnings. Prioritizing capital projects post-close and advising the organization on how to budget for environmental matters will create a smooth transition.

Additionally, the due diligence process should include the consideration and evaluation of an organization’s EHS programs and software, which are crucial to ensuring ongoing compliance with applicable regulations; particularly as you are melding teams, operations, and processes. This will also optimize the integration of sustainability tools and contribute to operational efficiency post-transaction.

Legal and Regulatory Compliance

Most organizations emerge with a long list of issues to address post-diligence. Don’t let the issues fall through the cracks. Instead, develop and commit to an integration plan, which should begin Day 1 after you’ve closed your deal. Safety risks and operational issues should be a priority in order for the business to continue running seamlessly. Maintaining the value of your assets will help put the company in a strong position to be evaluated and potentially resold in the future. If a future sale is the goal, exit strategy should be formed before the deal ever closes. Lastly, establishing a plan for ongoing maintenance of regulatory programs like routine auditing and compliance with permits will reduce interruptions and even prevent potential fines.

Conclusion

The post-merger period can be challenging, but it’s also a time of immense opportunity. It’s a chance to reevaluate processes, innovate, and set a new course for growth. By investing in thorough integration, listening to stakeholders at every level, and staying agile in the face of change, organizations can emerge stronger, more efficient, and better positioned to maintain asset value.