Four Ways a Board Can Ensure M&A Success

Growth-focused executive Ameeta Soni, with more than two decades of strategy and board experience, shares how boards can ensure successful M&A outcomes for companies.

Boards are supremely well-positioned to help companies succeed in their merger and acquisition aspirations. By charter, they are experienced and forward-thinking. In addition, they deliver insights to help set strategy, monitor company performance and management, and provide a sounding board to the CEO.

Indeed, plugging board members into the M&A process, from due diligence to post-deal integration, can be a make-or-break proposition. In my experience, I see four areas appropriate for board involvement in M&A:

1. Preparation for M&A. As part of its oversight role, the Board should examine potential M&A opportunities to understand the motivation for potential transactions as both an acquirer and a target. This exercise should be a regular staple of board/management alignment. As a board member and company executive myself, I can attest that this early engagement with the Board is a big plus.

At this stage, it is good to understand:

• How does M&A fit with the company’s business strategy?
• What new markets, customers, or sales channels will the deal create?
• What are the key criteria for identifying target companies?
• What are the current M&A trends in the company’s industry?
• What are the potential opportunities and risks?
• How would an acquisition likely be financed?
• What plan do the company and Board have to respond to an approach?
• What processes are in place to develop a deal pipeline, close deals, and integrate post-transaction?
• How well are the contracts centralized and records cleaned up?

2. Evaluating a deal. A board evaluating a proposed deal should test the management’s assumptions and understand the deal structure, motivations, and terms. Terms should be compared to industry benchmarks and can, in addition to price, include transaction financing, closing conditions, deal protections, and walk-away rights. Strategic and financial buyers can have very different motivations.

Peter Drucker once said, “Culture eats strategy for breakfast.” This is especially true with M&A. No matter how strong the strategic rationale for the transaction, it will fall apart if the two companies have a cultural disconnect. When evaluating the deal, boards should focus on this critical aspect while looking at details like deal motivation, structure, and terms.

Earlier in my career, I was with a company that, post-merger, dealt with horrendous cultural issues and distrust among the combined staff. While things worked out in the end, it took a lot more effort.

Due diligence is critical and can address market analysis, company financials, taxes, customer/partner agreements, IP, lawsuits, employment contracts, IT systems, cybersecurity, etc.

3. M&A Process. The management team drives the M&A process, but the Board can support the CEO and other executives with counsel and oversight. They can help with the negotiation, purchase and sale agreement, and even the communications about the deal.

But it’s during the post-merger integration process that the Board plays a crucial role, holding the management accountable for the success metrics outlined in the deal and asking questions like:

• What changes will need to be made post-merger to the company’s technology, operations, talent, culture, and more?
• How will the two companies’ customers be integrated?
• How has the executive team prepared for the integration?
• What will the management and Board monitor to assess the integration progress and deal success?
• The process also helps the Board identify potential company leaders.

4. Stakeholder Focus. The Board can help develop plans to rally customers and employees around the combined entity and stave off flight. They can also ensure timely communications and focus on talent. It is prudent to lock in essential employees while providing exit options for those that don’t fit. This strategy extends beyond the C-suite.

M&A activity can be an emotional time for those involved, from the front-line workers to the C-suite. With their years of experience as a calming and consultative force, board members are well-positioned to provide the cushion needed for a soft landing.

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Ameeta Soni has founded and held leadership and board roles with companies across multiple industries and technologies, helping raise over $100M in venture capital. She is Chief Marketing Officer at engage2learn, a Leeds Equity Partners portfolio company, where she focuses on delivering growth by developing and executing winning strategies. In addition, Ameeta serves on Maroon Venture Partners Fund’s investment committee and holds board roles with portfolio companies HomeBinder, Ompractice, and TOP the organic project, and several non-profits. Previously, she was a board director of PlumChoice, now part of SquareTrade/Allstate. Ameeta earned her MBA from the University of Chicago, her MS from the University of Massachusetts, Amherst, and her BS from St. Stephen’s College.