Addressing the urgent need to verify acquisition integration pre-deal assumptions and establish an integration roadmap to ensure that value acceleration is set up for earliest successful delivery of realistic objectives and goals.

When Private Equity firms facilitate an acquisition to one of their portfolio companies, the typical pace of the deal process and the need for confidentiality means that the deal due diligence, business case, negotiation and close is based on constrained access to key people and other sources of information.

Deals follow a well proven and tested benchmarking approach with PE firms drawing (where required) on their traditional transaction advisory service providers to generate the required assumptions to get the deal done on a best information basis.

This article lays out our views on the challenges presented by this necessary approach. It shows how a series of practical, fit for purpose steps immediately at deal close can help ensure that the road to acquisition value delivery is set up for success from the start and does not instead succumb to a non-virtuous spiral of firefighting and deal value dilution.

Challenge 1:

Confidentiality means that the deal necessarily had to close based on limited data and therefore bench-mark assumptions rather than considered facts.

A combination of constrained access to core documentation and limited access to the knowledge of key people, together with the breadth and intensity of evaluation, means that there is a medium to high risk that the integration synergy aspect of the deal value case will be based on invalid assumptions and that any delivery planning of this will, at best, be bundled within a high-level and broader overall value creation plan.


  • The specific integration synergy aspect of the value acceleration goal and the cost/budget to achieve the goals are either pessimistic or optimistic.

The integration roadmap to achieve the integration synergy goal mobilises on the wrong foundations (e.g., wrong objectives, wrong priorities, wrong sequencing, wrong cost estimates/budgets, wrong change programme resourcing in terms of capabilities and capacity requirements (including use of external partners), wrong timeline and either is not optimised, or worse still, is set up to fail.

  • If pessimistic, latent value opportunities are missed, or surface downstream when the performance improvement programme is already well in-flight and the cost to reset has now multiplied several-fold.
    • If the value gap is realised mid-flight, already stretched portfolio leadership team capacity is stretched further to deal with the change.
    • Additional private equity firm leadership capacity is required to focus on this issue when this could have been focused on more strategic rather than course correction aspects.
    • Cost to change at this stage will always be higher and typically much higher than if setting off on the right track from the start.
    • Value realisation from the deal is lost and or cost/value ratios are sub-optimal.
  • If optimistic, material change delivery and/or value realisation issues will start to emerge as initiatives progress and expectations/goals start being missed.
    • Already stretched portfolio company leadership team capacity is stretched further to understand and deal with the issues.
      • Leadership attention unavoidably gets drained into diagnosis of “why has this happened?”.
      • Leadership capability is questioned, reputations are tarnished.
    • Additional private equity firm leadership capacity gets sucked in to help resolve the issues when this capacity could have been focused on more strategic rather than course correction aspects.
      • Relationship between private equity firm executives and portfolio company executives may become strained.
    • Time to value improvement goals extend and the costs to value improvement goals increase (likely significantly).
  • In both cases there is a material additional draw on portfolio company leadership (including operational leadership) attention/capacity.
    • Leadership distraction means that previously stable business operations start to struggle, which creates a further resource drag-effect back into the change programme.


Challenge 2:

Portfolio company leadership naturally short on change leadership and change delivery experience and expertise (capability and capacity):


The leadership and operations of successful mid-cap portfolio companies are typically strong and effective entrepreneurial professionals with a capability-set well aligned to establishing a differentiated, rising star presence in their business sector. The acquisition, itself intended to fuel the next stage of profitable growth, will introduce a sudden and often significant additional demand for change leadership and change execution experience and expertise.




  • Strong entrepreneurial spirit means that the portfolio company leadership will naturally “take the challenge on”, “we can and should be able to do this ourselves”.
    • There is a medium to high-risk that the required change will be set-up with optimistic good intention, but will inevitably encounter several of the long typical list of change-journey-pitfalls that could have been avoided.
      • More executive time (Portfolio and PE) will be drawn into, and be distracted by, firefighting and course correction versus sustained strategic and operational leadership of growth and value acceleration.
        • Growth and acceleration slows down, and goals/timelines/budgets are missed, and optimum deal value is eroded.
      • The private equity firm value acceleration team have a range of expertise, but not the strategic purpose or capacity to fully support the change needs of the portfolio company.
        • When fires start to appear, the already stretched value acceleration team will be drawn in to support course correction, distracting them from delivering on their prime purpose and from achieving their core objectives and therefore carries high opportunity cost.


  • As typical with mid-cap organisations, the business and IT leadership and management team of the portfolio company are running very fast to support the business-as-usual operation – this also extending to the existing IT and other service providers engaged as part of the portfolio company’s ecosystem. Unlike many larger organisations, there is no operational resource contingency to accommodate additional performance improvement opportunities.
    • Entrepreneurial spirit means that key people take on the additional business and IT integration workload and typically will under-estimate the significant commitment required.
      • The combination of capacity and capability shortfall means that BAU starts to underperform against measures, which further amplifies the leadership strain in the business.

Challenge 3:

The combined private equity firm and portfolio company board ensure strong commercial scrutiny – budgets are tight and under the microscope. 


  • Tight budgets serve to amplify the natural sense to “do this ourselves… we can’t afford consultants and they don’t know our business as well as we do”. Entrepreneurial spirit kicks in, the portfolio company takes on the challenge, which risks the consequences listed above.
  • Either at the start, or when the size of the challenge starts to raise its head, there is a common propensity to engage support from a contractor(s).
    • Good contractors with the right capability/experience and the right approach to delivery are notoriously difficult to find. It’s a challenging enough task for those people who identify and select contractors as a career, but for typical portfolio company leadership without the specific experience or time to dedicate, the risks of search and select missing the mark are high.
    • Commercial scrutiny tends to steer selection towards the cheaper end of the contracting rate scale.
      • In most cases, you get what you pay for. Selecting the wrong contractor (capability and at least as important – style) is counter-productive and further increases the management overhead.
    • To deliver to their potential, even good change contractors need to be led/directed and actively managed by change leadership professionals. This capability/expertise is not typically common in mid-cap businesses, or if it’s there, it will already be overly busy elsewhere.
    • The overall implication is that the investment in contract support is counterproductive.


With the three major challenges described above in mind, we recommend Private Equity firms  follow these practical, fit for purpose to set up for success:

Step 1.

Invest just enough to get the high-quality advice, experience, and expertise that you need to make sure that the integration is set-up for success as soon as possible after the deal is public.

Strongly consider engaging this kind of support on a light touch, once removed basis pre-deal close so that there is another independent input to the deal making process. Such a step will also enable greater acceleration post deal close.


  • The value case is on solid physical/fact-based foundations so that the objectives, goals and expectations are challenging but realistic.
  • Experience is applied to ensure the journey to value realisation sets out on the fastest and most effective route, with built in checkpoints to enable re-routing, informed by progress and the latest view of what lies ahead.
    • There is a prioritised and logically sequenced high-level integration value acceleration plan.
  • Experience is applied to ensure that there is a clear view of the resources that will be required for delivery and assurance (timing, capacity, capability, likely source, back-fill)
    • There is an initial integration delivery resource capability and capacity assessment, gap analysis and plan.
  • There is a refined high-level integration delivery budget plan/case for change.
  • There is a clear and active governance plan to seek to ensure that the journey stays on track or returns to track quickly if advance signals indicate things are starting to drift.

Step 2.

Invest in support that as a fundamental principle leverages the knowledge of the portfolio company, the acquired company and the respective existing ecosystem service providers (IT and others).


  • A successful approach that augments, orchestrates, collaborates and leverages; rather than flooding in new/external resources that wastefully duplicate and seek to re-invent wheels

Step 3.

Ensure a rapid and incremental approach is employed.


  • The integration is split into logical phases, each with clear outcomes, and with checkpoints to ensure alignment and buy-in of the key stakeholders. The initial phases should be short and very outcome focused
  • Each phase should ensure optimum use of portfolio and acquired company capability and capacity (realistic) with capability and capacity gaps plugged efficiently by an integration support partner able to operate on a high leverage, “just enough” basis.
  • At each stage, the case for change is not assumed and instead evolves with clarity on a fit for specific case/purpose basis and that there is sufficient change-management attention to the emotional challenges of the integration (i.e. sufficient EQ rather than 100% emphasis on IQ).