A successful acquisition is about so much more than just getting a good price or finding the right business to buy. It is often more about integrating a business into your existing operations seamlessly and creating value. To do this, you need great managers.

Strong leadership is required at all levels to make a true success of an acquisition deal of any kind. When buying a business out of administration, good management is vital, in order to create something from nothing and guide the process from conception to completion.

The role of managers in a bolt-on purchase

A recent study by McKinsey & Company, entitled Equipping Leaders for Merger Integration Success, provides some great insights into the ways in which leaders at all levels can help a ‘NewCo’ become successful and most importantly, highly profitable.

Although the report focuses on mergers specifically, the insights can be applied to any business in the process of integrating with another business entity. This can happen when a business owner buys up a struggling firm to bolt onto their existing enterprise.

Bolt-on acquisitions often offer benefits such as greater scope for synergies, efficiencies and cost savings. If you run a manufacturing business but need a distribution business to reach its full capabilities, you may look to buy up an appropriate business from administration and make this new business much stronger by joining the two entities together.

Another example is if a business is on the lookout for cheap machinery to help reduce production costs. They may find that it makes sense to buy an entire struggling business and its assets, in order to strengthen their existing offering.

In theory, this should work, but integration is a tricky thing to get right, especially when there are staff involved – and this is where the role of management comes into play.

What level of management is most important to a successful integration?

The aforementioned McKinsey & Company report argues that there are three main categories of management that can play an active role in the process of integration. These are top-level leaders, integration leaders, and the broader NewCo leadership team. The last two of these three categories are mid-management level and this is where the real impact can be felt.

The report claims: “The integration leaders must learn how to manage integration planning to realise the greatest value from the deal and how to quickly mobilise teams that combine people from two different companies and span all functions and business units.”

It continues, saying that the NewCo leadership team “must lead integration execution and take the combined company, which is often establishing a fundamentally different culture or operating model, into a new era of higher performance.”

Practical examples of integration in the field

An example of a firm that has successfully integrated a struggling business into its existing operations is Hays Travel. This family-run independent travel agent chain bought up hundreds of Thomas Cook branches following the travel giant’s well-documented collapse in 2019.

It has since re-hired many of those who were told they had lost their jobs when Thomas Cook fell into administration, something which came about largely as a result of mismanagement by their original employers. Hays Travel has now won the accolade of one of the Times newspaper’s Best Companies to Work For in the UK as a result of its activities in this regard.

Hays Travel’s Head of Human Resources, Helen Liddle, commented on the accolade, saying: “Our people are the drivers of the business and this recognition shows that they are both motivated and highly engaged.

“We work hard to make happy, healthy environments for our people to work in and we value our employees’ feedback, investing in their ideas to make the workplace an even better place to be.”

It is precisely managers like Helen Liddle who play a crucial role in creating a positive culture following a bolt-on acquisition. Integrating new staff into an existing working culture is not an easy thing to get right, especially after they have been left in such a vulnerable position as a result of bad management in the past.

In conclusion…

This success story shows that it is possible to achieve greatness and add value to your existing business by bolting on a company or assets purchased from administration. You just need the right team to make it work.

In order to ensure you have this asset in place, preparation and training in advance of the integration are essential. Taking the time to allocate roles in the integration process to certain mid-level managers, and ensuring they are clear on their functions and how to fulfil their specific roles, will greatly increase your chances of success.