Full Sail Partners Blog | Mergers and Acquisitions

When evaluating a CRM or ERP system, a critical component of the decision-making process is assessing the data migration effort. Beyond the software and consulting costs, data migration presents its own set of challenges and expenses. As organizations move to the latest ERP systems, such as Deltek or similar ones, understanding the migration process becomes key to ensuring a smooth transition.

So, when you're asking yourself, "Should I migrate my existing data to a new ERP system?", here are the 6 essential questions you should ask:

#1 How Valuable is the Data?

One of the first steps in the data migration process is to understand how valuable the data is to your current and future business operations. In today’s world of data-driven decision-making, your data is likely more valuable than ever.

With the rise of the latest software development, high-quality, accurate data has become a business asset. Data that isn’t frequently updated or no longer relevant might not be worth migrating. However, real-time data on sales, finance, and customer interactions should be prioritized. In some cases, you may need to archive historical data rather than fully migrate it.

When considering whether to bring data to the new system, consider these four questions:

1. Is the data frequently updated and is it accurate? 
2. How often is the data accessed/needed? 
3. Do you use the data in reports? 
4. Do you need the data to make business decisions?
5. If your answer to these questions is rare or never, then the data is probably not worth migrating to the new system.

#2 How Organized is the Data? 

Organized data is essential for smooth ERP migration. Data that isn’t structured properly or with inaccuracies will cause significant roadblocks during migration. ERP migrations should be focused on data cleanliness and consistency.

Some existing data that is being considered for migration may not be consistent across a given data field in a database record. For instance, inconsistencies in key fields (e.g., a phone number field containing text instead of numbers) will need to be corrected before data is moved. Migrating to any latest ERP system requires standardizing data fields to ensure compatibility.

So, evaluating the amount of manual clean-up required can help determine if the information is worth migrating. 

#3 How Long Would It Take Someone to Manually Enter the Data? 

One of the main concerns in an ERP migration is the sheer volume of data that needs to be transferred. As mentioned earlier, certain data is more efficiently entered manually into the new system. It is crucial to evaluate the effort versus the cost. Small data sets or data fields with only a few records may be better handled manually, but large-scale migrations benefit significantly from automation.

If a particular field contains only 50 data records, is it worth the cost of migrating it programmatically to the new system? On the flip side, underestimating the time and effort required for manual data entry can significantly extend the implementation timeline. Our experience has shown that when a firm opts out of a recommended data migration based on analysis, the success rate of the overall implementation tends to decrease substantially.

#4 Is A Conversion Utility Available for my Data?

In today’s ERP landscape, conversion utilities are often available to help automate and simplify the data migration process. These tools can significantly reduce costs and time, especially when migrating to popular ERP systems like Deltek. If a conversion utility is not available, working with a data migration expert who can create custom scripts may be necessary. Be sure you evaluate the cost of these custom tools before starting your migration process. 

#5 What is the Data Migration Vendor’s Migration Process? 

Selecting a vendor with a well-defined and proven migration methodology that addresses the preservation, security, and speed of migrating your business data is key to a successful ERP migration. As an example, below is Full Sail Partners’ migration methodology: 

1. Data Mapping/Assessment – This step involves defining the scope, outlining the migration strategy and approach, and establishing the desired timeline. A proposal will be provided, detailing the costs involved.
2. Data Cleansing – During the mapping phase, data that needs cleansing will be identified. The necessary data will be cleaned and organized in the current system to prepare it for migration. The data migration expert will also analyze the existing data and ask relevant questions to assess its quality. Improving the quality of source data in the current system enhances the success of automated data conversion.
3. Test Migration – Once the migration scripts are created and the data is verified with the client, a test database will be set up for review.
4. Migration Validation – After receiving the test database, the client will examine the data in the new system to confirm it has migrated as expected.
5. Final Migration – After the data is validated, a final migration date is scheduled. Typically, all data is backed up based on the timing of a firm's billing cycle or payroll cycle. The final migration is performed over a couple-day period. Once the final migration is complete and reconciled the system is ready for use, minimizing downtime between the old and new systems.
6. Post Migration – If any issues with the data are discovered after the final migration, occasional post-migration updates may be required to address those issues.

#6 How Experienced is the Migration Expert? 

ERP migrations are complex projects, and the expertise of the migration team can make or break the process. Experienced ERP consultants and migration specialists focus on data strategy and digital transformation.

Most data migrations require a mapping document. This defines the scope and ensures that the data will be imported correctly. An experienced data migration consultant provides this mapping document as well as valuable insight on potential issues that might occur during the data migration process. Before proceeding with data migration, it's important to understand the role and expertise of the data migration specialist within the firm.

Is their primary responsibility focused on data migration, or are they handling multiple tasks? Do they have experience migrating data like yours? A seasoned migration expert typically specializes in this area, dedicating most of their time to migration. Selecting the right expert is crucial, as it can minimize post-migration cleanup and ensure the data is accurately and efficiently transferred to the new system. be necessary. Be sure you evaluate the cost of these custom tools before starting your migration process. 

Data Migration Success Involves a Well-Thought-Out Plan

In many cases, migrating data is a must when implementing a new ERP system. However, by considering these 6 critical factors—data value, organization, manual entry requirements, available conversion utilities, vendor process, and expert experience—you can ensure a smoother transition and get the most out of your new system.

Data migration has evolved significantly over the years. Still, the key to success lies in a well-thought-out plan, comprehensive data assessments, and collaboration with experienced vendors and experts. If you're still unsure about your data migration process, then see how Full Sail Partners can help you with personalized migration strategies tailored to your specific needs by clicking the image below.

Data entry can often be a tedious and error-prone task, especially when dealing with large volumes of information. Convincing IT to upload data into software systems can be challenging and time-consuming. Fortunately, for users of Deltek Vantagepoint, there's a more efficient solution: Data Imports. This feature, accessible from the Utilities menu, offers an intuitive interface for importing large amounts of Hub or transactional data while adhering to Vantagepoint's business rules for data entry.

Simplified Data Import Process for New Clients

For new Deltek Vantagepoint clients, the Data Import module provides a streamlined method for transferring information from previous systems. Whether you're migrating data from FoxPro, Oracle, or any other system capable of exporting data into an Excel or CSV file, Vantagepoint makes the transition smooth.

For example, if your accounting information resides in one system and project information in another, Vantagepoint's Data Imports are designed to handle this seamlessly. General ledger details and table information are uploaded separately, simplifying the process. With a basic understanding of Vantagepoint’s software configuration, preparing data files for import is straightforward and requires minimal training. This ease of use can significantly reduce the time and effort involved in migrating to a new system.

Enhancing Efficiency for Existing Clients

Existing Deltek Vantagepoint customers can also benefit from the Data Import module by adding new data to their current Vantagepoint instance or modifying existing information. For instance, if a firm is integrating new functionality that was previously unused, existing hub fields can be updated with data from an Excel file. Vantagepoint ensures that the imported data complies with business rules through a validation procedure, preventing any non-compliant data from being uploaded.

Moreover, transactional data can be uploaded into Vantagepoint via the Data Import module. Many clients utilize external applications to gather the information that must be uploaded into Vantagepoint. For example, subconsultants might use different systems to collect time or expense data, which then needs to be integrated into the Vantagepoint system. Instead of manual data entry, a CSV file can be used to upload this information. Vantagepoint verifies that the data adheres to business rules before it is posted in the Transaction Center.

Key Information About Deltek Vantagepoint Data Import

Whether uploading new data or amending existing records, the import process in Vantagepoint follows a consistent procedure. Currently, the data import functionality is split between Vantagepoint’s web app and the desktop app, with plans to eventually consolidate these functions. Users need to know where to go for each type of import. The web app supports importing data for Employees, Employee-related tables, Clients, Contacts, Generic Resources, and lists. Other imports, such as Projects, General Ledger, and transactional data, are handled via the desktop application.

To ensure successful data import, it is crucial to align the import data with Vantagepoint’s data structure. Data mapping should be performed prior to system validation. Once the fields that need to be mapped are identified, they should be matched with corresponding data in the import file. After mapping, selecting “Import” initiates the validation procedure. Any errors will be reported in a file and will not be imported. The import data can be validated multiple times to ensure accuracy before finalizing the import into the Vantagepoint instance.

Modern Advancements in Deltek Vantagepoint

Deltek Vantagepoint continues to evolve, incorporating advanced features to enhance user experience and efficiency. Recent updates include improved integration capabilities with other software systems, advanced analytics for better decision-making, and enhanced user interfaces for a more intuitive experience. Additionally, Vantagepoint's cloud-based platform ensures that users have access to the latest features and updates without the need for extensive IT involvement.

The Data Import module now supports more sophisticated data validation and error-checking mechanisms, reducing the risk of data inconsistencies and ensuring compliance with business rules. The integration of artificial intelligence (AI) and machine learning (ML) algorithms helps in identifying patterns and anomalies in data, providing users with actionable insights and predictive analytics.

Practical Tips for Mastering Data Imports

Data Import in the Vantagepoint application does not require extensive knowledge of databases or programming. However, practice and perseverance are key to mastering this tool. Full Sail Partners recommends practicing on a test database when learning to use the import feature. This approach allows users to familiarize themselves with the process without the risk of affecting live data.

For additional support, Full Sail Partners offers comprehensive training on the Data Import module. This training covers everything from basic data preparation and mapping to advanced troubleshooting techniques. By leveraging Full Sail Partners’ expertise, users can gain confidence in their ability to efficiently manage data imports, ensuring smooth and accurate data integration.

Data Imports Feature Ensures Efficiency for Vantagepoint Users

Deltek Vantagepoint's Data Import module is a powerful tool that simplifies the process of uploading and managing large volumes of data. Whether you are a new client migrating from a different system or an existing client looking to enhance your data management capabilities, the Data Import module offers a robust solution. With its user-friendly interface, comprehensive validation procedures, and continuous advancements, Vantagepoint ensures that your data entry process is efficient, accurate, and aligned with your business needs.

For more detailed guidance and training on using Deltek Vantagepoint’s Data Import module, consider reaching out to Full Sail Partners. Their team’s expertise can help you maximize the potential of Vantagepoint, enabling you to achieve next-level productivity and efficiency in your data management processes.

Mergers and acquisitions have become commonplace in the professional services industry.  When firms join forces, they are typically hoping that 1 + 1 = more than 2!  By leveraging the best that each firm has to offer in terms of talent, diverse market penetration, client/contact lists, and means and methods of success, goals can include forming a stronger company that continues to successfully execute projects, attracting top talent, and growing in revenue and profitability.   

During the merger/acquisition process there are of course many things to consider.  Change management around topics such as corporate cultures and people management, branding, client loyalty, processes and procedures, and systems must be included in those considerations! 

Full Sail has helped many firms going through mergers and acquisitions with the integration of their ERP systems, when at least one company is using Deltek Vision or Vantagepoint.  While an exhaustive list of lessons learned would be too long for anyone to compile or read, we’d like to share some of the top things we recommend. 

Get the Right People at the Table 

Make sure that management/decision makers, system administrators/power users, and data consumers from all firms involved are represented in the discussions around data integration.  Sometimes the best intentions of management have unintended consequences for the day-to-day users, and sometimes the day-to-day users are not yet aware of intended changes in policies and procedures.  In the cases of acquisition to a greater extent, and especially in the beginning, some of the users may feel too intimidated to speak up and indicate that the consequences of decisions would have a negative impact on their day-to-day activities or ability to report on crucial data.  Getting a thorough understanding of how each firm uses their system(s) and data to achieve its goals, and what they would like to be able to do better, are important when making decisions about how to set up the new single system.  Invite CRM, finance, project management, and HR representatives to participate.  In our project-based environments it is important that PM’s have input along with the marketing and accounting/finance teams! 

Consider involving a third party such as Full Sail Partners, to help facilitate the conversations.  There are many aspects of system setup that can easily be overlooked or may not have been used before.  A neutral third party can also contribute ideas and best practices that can help combine currently-disparate methods into workable solutions to move forward.  Additionally, having someone to help the firms involved stay on task and accountable for timelines can prove to be valuable during a time when there are many conflicting priorities.  Full Sail consultants in finance and CRM can help explain system functionality.  Full Sail’s human resources consultant can help identify the most appropriate HR policies from each firm.  And a data migration specialist can help streamline gathering data from one system (Deltek or not!) and get it set up for, and then imported into, Deltek Vision / Vantagepoint. 

Decide how the new Company will be Added 

There are several options for adding a new company to Vision / Vantagepoint.  Many firms will use the multicompany function.  Some companies will enable or expand an organization structure.  Others will incorporate the additional company’s data directly with their own.  It is critical to think through how you will need/want to report on and analyze financial aspects of the companies, and configure the system to meet those goals. 

Another aspect to consider is the currencies in which the companies operate.  Vision / Vantagepoint can be configured to handle transactions for multicurrency operations. 

Examine and Align the Data 

Data migration specialists work with firms to identify and ready the data.  In order to make sure all the necessary data is brought into the new single system, it is important to identify all the systems the merging or acquired firm uses currently to hold data.  Is there one ERP?  Is there an accounting system, a marketing system, an HRIS system, and some spreadsheets?  Deciding which data will be incorporated into the new system is an important first step and is also necessary to scope/estimate the migration effort.  This will start to lay a clear groundwork for the migration process. 
 
The firms will also need to decide how much data will be brought into the combined system.  Do you plan to bring everything from day one of business, a certain number of years, or only GL balances?  If not bringing in historical data, where will that data be kept and how will it be accessed for operational needs or potential audits?  Address how redundant data will be handled.  If both companies have some of the same clients and contacts, how will you identify what should be kept from each?   

Assigning “data owners” is recommended so the data migration specialist knows who to ask when questions arise.  These data owners would also be responsible for participating in meetings about the data, developing a comprehensive test plan for users, and then reviewing and testing the migrated data. 
 
After identifying the higher-level parameters, consideration must be given to the details.  Decide on code formats and systems for numbering records such as the chart of accounts, employees, firms, and projects.  Alignment is needed for the chart of accounts, so mapping the new company’s accounts to the existing “like” accounts and identifying any new accounts that are needed is often one of the first steps.  Project numbering and work breakdown structure (WBS) will need to be carefully reviewed.   Keep in mind that not all systems have the same type of WBS, and even if both companies are using Vision / Vantagepoint they may be using the WBS differently.  Labor categories, labor codes, billing terms, accounting periods, and even the overhead projects all need to be given consideration.  For example, if the new company’s existing system does not use an equivalent to labor categories, and the Vantagepoint environment requires them, how will that be handled?  Will overhead time be loaded, and do the companies have the same overhead projects, will more need to be created, or will some need to be combined?    

Staff Training and Communications 

Staff at both companies will need training and communication about the changes.  Training and communication should not be an afterthought!  Employ sound change management throughout the process.  Those on the M&A team may forget that the rest of the staff don’t know the decisions being made.  The employees at both firms may be nervous or anxious about the changes.  Giving employees the information they are allowed to know in a clear, concise, and timely manner can help. Offer the info in easy-to-consume bits, but don’t overwhelm them with too many separate communications. Even something as simple as a list of who can be contacted for questions in specific areas will be helpful!   

Training is critical, even if both firms use the same system.  There are as many ways to use Vision / Vantagepoint as there are firms that use it!  Be sure to cover new processes, nuances in the database such as user-defined items, and add-on products.  Prepare a training plan and send the training session invites well in advance.  Have a leader from each firm in the sessions (in case any employees start asking the trainer questions on decisions), in addition to your top-notch trainer(s) or Full Sail consultant and someone in an equivalent training-type role from the other firm that can help “translate” questions that may be asked in company-specific lingo.  Record the training sessions so those that cannot attend can catch up and those that would like to re-watch can do so.  Consider incorporating “cheat sheets” and infographics so people can have a handy reference the first few times they go through a new process.  Make sure back-office staff are comfortable doing their jobs in the new system.   

Company growth is both exciting and challenging.  Involve the correct people, carefully consider processes, procedures, and data, and communicate with your staff.  Reach out to the Full Sail team for guidance.  We love to see our clients succeed! 

With growing global political tensions, trade wars and volatile markets, one would assume that mergers and acquisitions (M&A) activity would slow down. However, this has not been the case.  As a result of US tax reforms and a reduction in the US regulatory climate, firms are retaining larger amounts of cash reserves. Furthermore, according to a recent Deloitte survey, M&A activity will continue to increase throughout 2019. Here are some reasons for this trend.

Need to Diversify

Architecture and engineering (A&E) firms must diversify their service offerings to continue to win new business. Diversifying in the A&E industry is usually in reference to purchasing or merging with another firm that has a different set of skills. For instance, an engineering firm specializing in soil science has a desire to offer a different service like water control which requires it to acquire or merge with another firm. Therefore, M&A activity will continue to grow to meet these needs. 

Generate Firm Growth

Historically, firms have used excess cash flow to pay down debt, purchase shares back or simply retain cash reserves as a backup. However, A&E firms are now finding that acquiring another firm is a simple and lucrative way to grow business. Essentially, this allows a firm to increase its market share and acquire a competitor’s client base.

Demographics are Changing

Many A&E firms are private companies owned by baby boomers. These owners are starting to look for an exit strategy, and an easy solution is to put the business on the market. By doing so, owners can request for bids to purchase their firms and obtain a fair market value. As a result, owners can capitalize on their success and enjoy retirement with a nice-sized nest egg.

Preparing Your Firm for a Merger or Acquisition

A&E firms desiring to take the M&A path need to make sure they have their internal records clearly documented. This includes providing understandable project financial reports, presenting any risks a buyer should evaluate, and having records that are easily auditable. Lastly, and probably most importantly, firm leadership should communicate their intentions and the expected results of the merger or acquisition with their employees. Is your firm ready?

2018 was a banner year for mergers and acquisitions (M&As) across the A&E industry. If trends continue, 2019 should be even better. So, what is the driving force behind this increase in deals? Let’s check out why firms want to make these big changes.

Buying for Geography

Firms are wanting to expand their footprints. In many cases, a firm entrenched in a state or region has a desire to expand its services and brand to new territories. In some instances, this is driven by their clients who insist on a physical presence in order to win work. Additionally, there is an advantage to acquiring a firm in a desired territory since it comes with a backlog to help in absorbing the cost of becoming established and selling new work.

Buying New Disciplines

Often in tandem with geography there is a desire to grow a firm’s offerings and skill sets. This can be addressed in one of two ways:

1. Acquiring a firm with parallel disciplines that are in different market sectors
2. Acquiring a firm with a completely different discipline base

Both instances provide the opportunity for cross selling and talent development.

Acquiring the Competition

Another common occurrence in the M&A world is acquiring competitors. Simply, it’s a great way to see immediate market growth. When acquiring the competition, there is the option to absorb staff into your firm’s current workforce. Therefore, the need for acquiring resources can lead to buying the competition.

Selling to Private Equity

Another trend is selling to private equity.  This allows the firm being acquired to continue operating as is and use the infused capital to hire new talent or purchase assets, or to buy out members of the existing ownership looking for an exit strategy. Selling to a private equity group doesn’t come without its challenges though. These purchases often require a material change in accounting practices and reporting, and new ownership doesn’t always understand the operation or industry. In addition, follow on sales between equity firms are always looming.

What’s Your Firm’s Reason to Go Down the M&A Road?

Each firm has its own reasons for choosing to go down the M&A road. Is 2019 going to be the year your firm makes a move to gain a better hold in the A&E industry? If so, remember that it is always recommended to seek outside parties to help with the technical aspects of the M&A process.

Many firms in the architectural and engineering (A&E) industry are using mergers and acquisitions (M&A) as a strategy to grow. As discussed previously in a blog by Mike Kessler, a firm must first choose the best fork in the M&A road to accomplish its goals. Once this path has been taken, a decision must then be made about which data to migrate and the steps to take for a smooth transition.

Deciding Which Data to Migrate 

If you ask project managers which data is important to them, they will usually say all of it. However, is that truly the correct answer? Probably not. Depending on which direction your firm chose in the M&A process, there are many questions to ask. Something that may help decide which data to migrate is to determine who is responsible for the work completed prior to the M&A. 

Additional concerns might be: 

1. Are there government contracts or audit requirements that require full detail?
2. Are there open accounts receivable that may be disputed and why?
3. Are there any outstanding claims against a project?
4. Did the acquisition include assets that need to be tracked?
5. Who will own the open accounts receivable?
6. Will you be responsible to pay any outstanding vendor payments?
7. Do you need prior invoice details, prior invoice totals or just prior billed totals?
8. How much value is left to recognize for revenue?
9. Does the prior revenue method used by the previous firm line up with how you recognize revenue?
10. Will the client let you assume the contracts?
11. Are there reporting requirements that are ongoing with the client?
12. Do you need visibility into prior work for cost comparisons?

The answers to these questions, or even other scenarios, may place data requirements on how much data you bring in and at what level. Again, the amount of data to be migrated depends on which fork was taken in the M&A road and the organizational structure of the entity post M&A. After addressing which data to migrate, then you can move on to the how. 

Options for Migrating the Data 

So, now that you know which data to migrate, how are you going to do it? 

Before providing the migration options, please note that having knowledgeable personnel to assist in this process can save time and prevent frustration. 

There are three options for data migration: 

• Vision Data Import
• Microsoft SQL
• Manual Entry 

Determining the Data Migration Process 

Once you have picked the migration option, you must decide what order to migrate the data in. This is important because every firm has critical processes and secondary processes that need data to function and keep the company running. 

Here are some things to consider: 

• Prioritizing the critical areas
• Setting a schedule of what is required (this will help guide you in the process and make sure necessary parties are involved)
• Having a company champion or champions who can answer employee questions
• Keeping communication lines open (this will allow for an easier transition) 

Assistance with Data Migration Decisions is Available 

Regardless of which direction your firm takes in the M&A process, Full Sail Partners can offer help with your data migration decisions. Contact us and one of our subject matter experts will be in touch. Let us help you ease on down the M&A road.

Mergers and acquisitions (M&A) in the architectural and engineering (A&E) industry are on the rise. Unfortunately, many firms are not prepared to successfully implement the M&A process. With an acquisition, it is imperative that the “buying” entity have a well-defined set of procedures to easily onboard the incoming firm. In the case of a merger, all involved firms would need a set plan which would dictate the transition to a new firm. However, first a firm must decide the direction it will take regarding the M&A process and evaluate how it will affect the current organization’s structure.

Navigating Forks in the Road for Your Firm 

There are many reasons a firm may decide to begin the M&A process. Each firm has its own vision for the future. On this path, there are 3 “forks in the road,” and a firm must choose one:

1. Absorbing the acquisition into an existing organization
2. Creating a new organization within an existing company
3. Creating a new company 

Making the Acquired Company Part of the Buying Company

Absorbing the acquisition into an existing organization is the easiest and most straight forward. This scenario is usually the result of a simple employee purchase. For example, a design engineering firm acquires a mechanical engineering firm. In this case, the incoming engineers are integrated into an existing profit center (department). They may have brought projects with them or are going to be staffed on existing projects. Since it requires no structural changes to the database, very little of any testing is needed. The focus would be more human resources related blending the culture of the acquired firm into the existing one. 

Making a New Organization within the Buying Company 

Creating a new organization within an existing company is most often the result of expanding service offerings. For example, a base building architectural firm acquires an interiors firm. If the firm’s current structure is studio based, a new studio would be required for the interior work. Under this scenario, a change to the existing structure is made that will require testing. This will include: 

• Cross Charging
• Overhead Allocation
• T&E group management 

In addition, reporting parameters need to be updated to ensure the new organization is included in all metrics and indicators. This will require reasonable lead time to do a test and final cutover. 

Making a New Company Altogether

Creating a new company by merging firms is the most common scenario, and regardless of the dynamics, is often driven by numerous outside factors such as: 

• Tax implications
• Buyout and payout provisions
• Currency requirements
• Country, state, and other municipal requirements
• Banking relationships
• Investment and or holding company requirements
• Professional licensing requirements 

In a merger situation, a change to the existing structure is made that will require testing. This will include: 

• Intercompany Billing
• Foreign currency management
• Consolidated reporting (in addition to the reporting parameter updates noted above) 

Additional factors that will need to be considered in risk mitigation are: 

• Rules defining internal pricing
• New currency being introduced into the environment 

This situation will require at least one test cutover and lead time needs to be considered during the process. 

Final Considerations for Mergers and Acquisitions   

Once you have selected which of the forks on the M&A road to take, the real work begins. Beyond the integration testing noted above, there are two other risk areas that must be considered. 

1. Data import
2. Revenue management 

Regardless of which direction your firm chooses to take in the M&A process, Full Sail Partners can offer consulting from subject matter experts. Contact us and we will be happy to help. You don’t have to walk alone. Additionally, we will be at the 2018 Southeast States M&A Symposium in Miami, Florida on January 24th and 25th. 

You are having a great year, business is steadily growing and employees are happy. With continuing growth in mind, you acknowledge that to meet future workload needs, your firm should contemplate acquiring a similar firm. Therefore, it becomes time to think about Mergers & Acquisitions (M&A).

At the outset of the merger and acquisition process, you should address some important questions such as; will you be in need of a multi-company database and will the new acquisition require an integration as well as a new profit center?

If you leave these questions and others unanswered, it can affect the success of the M&A. The process may fall short of expectations leaving you wondering why you bought the firm in the first place. You must ensure that this doesn’t happen by focusing on the critical details and making the deal a success.

Why are Mergers and Acquisitions happening?

In 2015, M&A hit an all-time high in the A&E market, and it was predicted that the M&A rate would remain strong through 2016. According to Deloitte, “While 2016 may have started out at a tepid rate, October 2016 became the busiest month ever for domestic M&A with its unprecedented wave of transactions.”

In 2016, companies were motivated by low interest rates, resilient stock prices, solid employment and an abundance of cash. Additionally, a survey by KPMG found that companies wanting to solidify their position in their markets was the number one reason for deciding to buy another firm. So what were the results of the deals?

According to a survey done by Deloitte, most respondents said some of their 2015 and 2016 deals fell short of expectations. A key takeaway from this survey is that integration planning and due diligence ranked high on the list as areas of crucial importance in making successful deals. 

Even though not all deals performed as expected, companies are still excited. The M&A outlook is positive for 2017 with 75% of survey respondents anticipating that deals would increase and 64% anticipating those deals would be bigger! More companies say they have increased cash levels and intend to use their cash to strike more deals. Furthermore, 73% of respondents said divestiture was a major focus of 2017. 

How much is enough Due Diligence?

All too often, the due diligence phase does not uncover accounting practice differences and true project costs. Primarily, participants focus on the backlog, client relationships and project revenue. However, client systems may only show a small picture into the project lifecycle and not provide insight into work in progress, write offs, overruns and true project gains or losses. If a company does not allow enough time for this phase before the deal is done, resources may feel pressured to present a positive picture of the purchase and may not have adequate time and resources to show the complete picture.

Even more, it’s not just the numbers that need to be in line. Firm culture can cause a deal to collapse. Employees may react with concern for their future and not view the new company’s goals and missions as being their own. As a result, they often feel they are the new kid on the block, even though they may have been with their current company for 25 years.

For example, a Boston firm, where people go to work in suits, buys a Texas firm, where employees wear jeans and hunt on their lunch hour. Obviously, these are opposite cultures, and this needs to be addressed during the due diligence process rather than during the employee welcome or two months after the purchase is finalized.

Most employees just want to know they will be paid the same pay, have the same benefits or better, and can easily complete their daily functions with little interruption. Are files and drawings easy to store, move and retrieve electronically? Is the office in the middle of the desert with no internet or cell service, and if so, how will timesheets be submitted on time? Is the technology team ready to meet that challenge? These basic questions are often key factors to employee dissatisfaction and are easy to overlook without proper due diligence.

Lining Up the Right Players for Integration Planning

So who should be involved in the M&A and at what point? You need to make sure you are including individuals that can be your champions. These significant players must understand both the current company’s mission and the new company’s mission. Armed with this knowledge, they will be critical in the planning, execution and support of the new joint company. Keep in mind that there will be a learning curve on both sides. Systems are new, processes are new, and policies are new. If you can make the transition transparent and seamless to all parties, you will enjoy a more effective integration.

Avoid an Underperforming Merger and Acquisition

Be prepared as you begin the M&A process and focus on the critical details. The deal will be successful if both due diligence and integration planning are handled effectively. Have your key players do the proper research and get answers to crucial questions. Doing so will ensure that the firm being acquired, or being merged with, will suit the culture of your firm and that there will be a seamless transition.