In Conversation

Creating Value through M&A

In conversation with Srikripa Srinivasan, Senior Director, Finance & Operations, Dell EMC

The CFO’s role now extends well beyond control, finance, and compliance. Many play a decisive role in M&A, which has itself become a critical tool for shaping corporate portfolios. At every step of the way – from target identification and due diligence, to post-close execution, including the need to balance financial analysis, business aspirations, and cultural issues – Finance leaders are in a unique position to mould the deal, and to help deliver on the promised shareholder value. Dell’s USD 67 billion cash-and-stock purchase of EMC – the biggest-ever tech-sector acquisition – holds several invaluable lessons, from synergy-building, to managing the complexities around system, process, people, brand and cultural integration. Srikripa Srinivasan, Senior Director, Finance & Operations, Dell EMC, shared with CFO Connect the three critical success factors of the deal: customer focus, human capital, and processes.

‘CUSTOMER FIRST’

“A well-crafted communication plan can help to greatly reduce customer anxiety and apprehensions during a merger”

Customers lie at the heart of any merger, and what they seek above all is predictability. Most often, however, there are no credible sources of information to update them on how the deal is progressing. Well-crafted communication, whether internal or external, can thus help reduce customer anxiety and apprehensions to a great extent. To achieve this, the business must be completely aligned with its customers, responding to their needs and priorities in a timely manner, and consistently delivering exceptional value and innovation, while solving some of their biggest challenges.

It is also important to ensure that customers understand the need for, and likely benefits that will flow out of the merger. Defining the ‘customer messaging’ sooner rather than later is a key imperative. Doing this will not only help dispel any rumours, but will also let customers know how they might benefit from the deal – and why it makes financial sense. It is equally important to minimise any disruptions to the customer interface and experience: the synergies must be apparent to the customer from day one, but this requires detailed, advance planning.

EMPOWERING EMPLOYEES

“While completing any merger, it important to have supportive, empathetic and understanding conversations that make employees feel respected and valued”

A merger can be highly unsettling to employees, greatly impacting their productivity. It is therefore crucial to have supportive, empathetic and ‘understanding’ conversations, which go a long way towards making people feel respected and valued. What helps is creating a robust internal communications strategy, which includes detailed timelines on the specifics of the announcement, and clear responsibilities and ownership, such as for informing particular audiences, or for crafting the key messages. This approach ensures that everyone receives the same information in a relatively short timeframe, and helps contain unnecessary issues that stem out of shop-floor conversations.

It is also important that the team be aware of how to start operating from day one, with a clear understanding of which products they will sell; which customers need to be approached; and how to collaborate with the new teams. In the Dell-EMC case, an existing, 10-year-old partnership helped the teams on both sides, because they already knew each other well.

Also extremely critical is to ensure that the organisation’s cultural fabric does not change dramatically. Businesses should aim for effective integration, which involves successfully merging the cultures of each group, and adopting a set of shared values and practices. Regardless of what their separate cultures may have been before the deal, the post-merger businesses should commit to a single culture that they wish to create, and then go about quickly putting it into place.

STREAMLINING STRUCTURE AND PROCESSES

In the course of any merger or acquisition, various systems and processes must get integrated – and it is important to do this post-haste. The two businesses must focus on creating a common process rule-book, and percolate that throughout the organisation quickly and effectively. One way to ensure that the required changes are adopted smoothly is to hold employee and customer workshops that brief people on the new or ‘renewed’ processes.

“A good way to ensure timely adaptation of merged processes is to hold employee and customer workshops for a debrief on the new or ‘renewed’ processes”

Any integration will demand that each organisation take several, critical decisions in a short time-span, and many of these decisions will be highly interdependent. This means that decisions must be closely coordinated, and everyone needs to understand the impact their individual actions might have on others. Furthermore, it is vital to identify any strategic decisions that the executive leadership team must take, and to implement a disciplined decision-making framework that is based on facts and viable alternatives. Systems, processes and tools are important, but a successful merger ultimately boils down to leaders having a clear vision of what they seek to accomplish.

No decision should feel like it came out of a vacuum, but must reflect ground realities, and be centred on the customer. Speed is of the essence, as is the ability to quickly course-correct with confidence and agility at every level of the organisation. Hence, every procedure or process must be structured in a way that ensures zero value erosion.

By focusing on these three critical factors, and by implementing a strategy built around a clear leadership vision, it is possible to ensure a successful culture-shift. Dell-EMC did exactly that, and continues to do so today.

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