Christopher Mulhern, Chief Product and Technology Officer, Apex Group

 

Acquisitive business growth shows no signs of abating despite current macroeconomic headwinds and an inflationary environment. Data from the first half of 2022 shows continued deal activity; according to EY data, worldwide M&A activity reached over $2 trillion with deal volumes rising 35% and deal values increasing 13% on average, compared to the previous M&A cycle.

At global financial services provider Apex Group, we’ve seen a deal boom of our own: in the last five years, we have completed and successfully integrated over 30 acquisitions on all continents (except Antarctica!). In addition to double digit organic growth, these acquisitions have transformed our business to a global leader, employing over 10,000 people and servicing $3 trillion of client assets from 85 offices worldwide.

This unique experience means that our team have gained extensive practical insights into doing deals and unifying businesses. Every deal is different – but a smooth integration strategy and robust implementation model are essential to achieving a value additive transaction, not to mention keeping your employees and clients happy.

Here, we share some of our insights into the common mistakes that companies make when playing the “integration game” and draw on our experience to offer tips on how your team can mitigate and overcome these challenges.

• Slow off the mark

Planning the integration process is not something which should be left until the deal is done – quite the opposite. Instead, it is important to consider your integration strategy as part of the deal process. At Apex Group, we have a robust integration model which takes shape prior to closing, so all workstreams understand their roles through detailed– yet flexible – project planning. With this forward-thinking approach, you are able to better articulate the benefits that the deal will bring for your clients and employees – and ensure that the integration process is as smooth as possible for all your stakeholders. It is by planning ahead and putting people first that has enabled Apex Group to incorporate over 30 acquisitions to the Group without losing a single client as a result of an integration decision.

• Choose your A-Team

Choosing the right team to lead the integration of a business is essential to a successful outcome. By appointing the right leaders with the necessary skill sets is crucial – by having a dedicated integration resource including specialists from different aspects of the business including HR, Communications and Technology. While the team may be supported by external consultants, they must be solely focused on the integration process and not distracted by competing business or client demands on their team. 

• Don’t takeover

The mindset with which you approach the integration is essential – the process is a two-way street with much for both parties to learn from one another in order to achieve the full value-creation potential. At Apex Group, we are determined not to overlook the processes, lessons and approaches which can be learnt and adopted from the businesses we have acquired. 

One valuable lesson from our experience is that business leaders must be open and receptive to different approaches, perspectives and processes which an acquisition can bring. When operating in a competitive business environment, a relentless focus on operational improvement and efficiency is key, and the addition of a new business can offer an ‘outside in’ view. For example, when we acquire a company, we do not immediately assume that “our way” is the only way, and rather than imposing “our” approach on acquired entities, we carefully evaluate what we can learn from the business we have bought, and how that can be collaboratively integrated into our company.

In order to achieve this, when developing our robust and repeatable integration model, we ensured that every Apex Group integration workstream is co-led by the Apex Group representative and a partner from the acquired business. As a result, every workstream in the integration is led collaboratively by two business leaders to manage, run and execute their aspect of the integration. In this way, right from the beginning a cooperative environment is created between the acquired entity and Apex Group. 

• Communication, communication, communication

Through all stages of an integration, it is essential to maintain open lines of communications between all your key stakeholders – including regulators, clients and your employees – as radio silence can be harmful to how our acquisition, and subsequent integration are received in the long-run. Whether in the financial services sector or other in more consumer-focused industries, it is important to communicate that the quality of service that you deliver will remain paramount throughout all stages of the integration journey. This begins by announcing the acquisition, communicating the benefits of the transaction for your clients, employees and investors and setting out a clear timeline for completion of the deal.

Regular updates on the integration can help to allay concerns before or as soon as they arise and anticipate any potential challenges and halt problems before they arise. This is a tenet we have followed closely at Apex Group – during our acquisitions, we have not lost a single client as a result of an integration decision.

At the completion of the integration, you should show and tell the market of the successful outcome of the deal and ensure that the wider industry is educated on your new capabilities, services, technology or geographic footprint and replace outdated assumptions. For businesses which are growing rapidly via acquisition, this is even more important. With a company such as Apex Group, which has evolved rapidly over the course of five years, from a fund administrator to a global financial services provider offering solutions from digital banking to ESG to $3 trillion of client assets, delivered by 10,000 people. 

• Don’t underestimate the intangible

Research into the outcome of acquisitions, time and again, finds that the intangible asset of culture is a key component in the long-term success of a transaction in creating value. The value of creating a shared sense of identity, and a unified culture, cannot and should not be underestimated. 

As detailed above, communications must be initiated early in order to create trust and demonstrate to employees the shared values of the two businesses. By building an overarching common purpose and momentum through a shared culture, a solid foundation is laid for future integration decisions. On the downside, misjudged or tone-deaf communications at this early stage can build a divisive “them and us” sentiment which is difficult to overcome. 

For example, at Apex Group, we work to clearly demonstrate how employees of the acquired entity will benefit from becoming part of a global business – with a wider range of services to support their clients’ growth as well as new opportunities for their individual, learning and development as well as global mobility through a network of over 85 offices in more than 40 markets.

Key takeways

When undertaken with a clear integration strategy, M&A can be a powerful driver of sustainable business growth as we have seen at Apex Group in recent years. By avoiding some of the common pitfalls outlined in this article, businesses can achieve not only additional scale, but deliver strategic advantages to the benefit of clients and employees, including supporting expansion into new geographies, product areas and technology platforms. With global M&A activity levels showing no signs of slowing in the current macro-economic environment, we will continue to see winners of “the integration game” across all sectors and industries. 

About the author

Christopher Mulhern is Chief Product & Technology Officer at global financial services provider Apex Group. Christopher joined Apex Group in October 2017 following the acquisition of Equinoxe Alternative Investment Services. He has over 20 years of experience leading operational strategy within the fund services industry and was brought into Apex to oversee the global Group’s structure and operational framework and has successfully led the strategic integrations of multiple businesses simultaneously.