The deal is the easy part, integration makes or breaks acquisitions

Sealing the deal is never the end point to an acquisition – and firms often underestimate the ease with which they will be able to integrate new properties into their wider network. Matthew Sutton, chief growth officer at Burgess Hodgson, explains why culture deserves as much attention as commercial terms, and why successful integration should be viewed as a long-term strategic capability rather than the final stage of a transaction.

When you acquire a business, you spend a considerable amount of time explaining who you are, how you work and what you intend to do once the deal is complete. By that point, you know what you mean by those promises. The people joining you don’t.

That’s something we’ve become more conscious of as Burgess Hodgson has grown through acquisition. We know our intentions are good, but we can’t expect the partners and employees of another firm to take that on trust. They need to see that we do what we said we would do.

Completing an acquisition is far from straightforward, and neither is what follows. Bringing together technology, databases and systems can be particularly difficult. But there is another challenge that starts immediately after completion: making sure the people joining you feel comfortable with the decision that’s been made and confident about what happens next.

Signing off

For us, that work begins before the deal is signed. We’ve passed on potential acquisitions where we didn’t feel the cultural fit was right. We want to work with practices that genuinely care about their clients and put those relationships first. We want people joining us to believe in that approach already, rather than expecting them to adopt it after completion.

It’s also why we don’t have a rigid integration playbook that every acquired business is expected to follow. Each practice comes with its own partners, employees and clients, many of whom have worked together for years. You need to understand those relationships before deciding what should change.

We’ve been conscious of the need to get the pace right. We’re aware of situations in the wider market where employees have been unhappy with changes introduced too quickly. Equally, if businesses remain entirely separate, you can end up with a collection of individual practices rather than a properly integrated group. Every firm has to find its own approach, but both considerations have informed ours.

That means being selective about what changes and when. We have employee software that we would expect to be useful across an expanded group, for example. But if an acquired practice has been producing accounts on a particular system and looking after its clients successfully, we don’t see a reason to change that immediately. The size and circumstances of the acquisition will influence how quickly different parts of the business come together.

Communication requires similar judgement. Before completion, there is a balance between telling employees about a possible transaction too early, when it may not happen, and telling them so late that they feel blindsided. The owners of the business being acquired have to make that decision, with support from the buyer where appropriate.

Once the deal is complete, we’ve found that regular conversations are essential. We’ve prepared FAQs and presentation packs for incoming employees, trying to anticipate what they’ll want to know. Yet some of the most useful discussions have happened in staff roundtables, where people have asked questions we simply hadn’t thought of.

That’s understandable. Someone who has worked in one practice for years will be used to doing things in a particular way. What seems like a minor change to us may be a significant concern to them. We want people to feel comfortable raising those questions, including the ones they might worry sound silly. There aren’t any silly questions when someone’s working life is changing.

You also need to consider employees already in the acquiring business. One concern we’ve encountered is whether bringing in senior people from elsewhere will affect their own opportunities for promotion. As the group grows, we need more senior people as well as more people throughout the business. But that needs to be communicated rather than assumed.

Some of the things that make the biggest difference are surprisingly basic. When someone joins, are their laptop and phone ready? Can they access the systems they need? Have they been added to the employee portal and the right mailing lists? Will they receive the same internal announcements and invitations to social events as everyone else?

Being accidentally left off an email might seem insignificant, but it can make someone feel less important or as though they aren’t properly part of the team. Getting those details right shows people that you’ve prepared for their arrival. The same applies to clients. Engagement letters need to go out correctly, initial communications need to be clear and the business needs to demonstrate that it’s ready to look after them.

Great expectations

Our expectation is that clients have stayed with their accountants for years because they like the way they’ve been looked after. Their immediate concerns after an acquisition are often whether they’ll still deal with the same person and whether their fees will change.

Our approach has been not to unsettle those relationships. We aren’t looking to change relationship managers, communication arrangements or fee models simply because a transaction has taken place. Over time, better technology should help us produce information more quickly, communicate more effectively and work more efficiently. But those improvements should support the service clients already value.

None of this means integration is easy to plan. We’ve deliberately sought specialist advice throughout the acquisition process, even where that has meant additional expense. There are too many things you might otherwise overlook, particularly when you’re doing something for the first time.

You also need to know whether the integration is working. Financial performance matters, of course, but so do staff satisfaction, employee retention, client feedback and client retention. In a smaller practice, you may know individuals well enough to get a feel for how things are going. As the group grows, that needs to be supported by data. You can’t run a business on feelings alone.

If I could go back to before we started making acquisitions, I’d tell myself to get more support in place earlier, both internally and externally.

It’s tempting to concentrate on completing the next deal and assume the operational arrangements can follow. My experience is that you need to prepare for the additional scale first. Have the people, systems and support ready before the business grows, rather than trying to put them in place afterwards.

Completing the transaction matters. But what happens next is what determines whether the people and clients who joined you feel they’ve made the right decision.