Surprises are best uncovered during due diligence. Finding them after closing, even if they seem beneficial (like an un-negotiated supplier contract), indicates flawed homework and disrupts the integration plan, damaging credibility with stakeholders.
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A successful deal can be derailed by poor information transfer between the diligence and integration teams. Without a structured handoff process and a centralized system of record, valuable context on risks and rationale is lost, forcing the integration team to rediscover critical information post-close.
To maintain momentum, Cisco makes critical integration decisions—like site strategy or system consolidation—during diligence, not after close. These decisions are embedded into the final deal commitment materials, preventing post-close paralysis and emotional debates, allowing teams to execute immediately.
To avoid a broken handoff, embed key business and integration experts into the core deal team from the start. These members view diligence through an integration lens, validating synergy assumptions and timelines in real-time. This prevents post-signing surprises and ensures the deal model is operationally achievable, creating a seamless transition from deal-making to execution.
Many M&A teams focus solely on closing the deal, a critical execution task. The best acquirers succeed by designing a parallel process where integration planning and value creation strategies are developed simultaneously with due diligence, ensuring post-close success.
By the time a strategic acquirer enters due diligence, the desire to do the deal is already high. The process's primary purpose is not to hunt for deal-breakers but to confirm key assumptions and, more importantly, to gather the necessary data to build a robust and successful integration plan.
A key part of buy-side M&A is conducting 'reverse diligence,' where the buyer transparently outlines post-close operational changes (e.g., new CRM, org charts). This forces difficult conversations early, testing the seller's cultural fit and willingness to integrate before the deal is finalized.
Pre-close diligence provides an incomplete picture due to legal and access limitations. The first 30 days post-acquisition represent the real discovery phase. This is when the integration team gains full access to financials, customer data, and systems, allowing them to validate assumptions and refine plans based on complete information.
Instead of an immediate post-close review, conduct retrospectives 6-12 months later. The true quality of due diligence and strategic fit can only be assessed after operating the business for a period. This delay provides deeper insights into what was missed or correctly identified, leading to more meaningful process improvements.
To avoid post-close surprises and knowledge loss, marry diligence and integration leads before an LOI is even signed. This ensures real-world operational experience informs diligence from the start. The goal is to have a drafted integration thesis by LOI and a near-complete plan by signing, not after closing.
If a deal team says, "don't bring the integration people in because they'll mess up the deal," it is a massive red flag. This indicates they are likely sugarcoating problems and painting an overly optimistic picture for the seller, virtually guaranteeing post-close surprises and failure.