7. Make It Work
Integration, the final phase of an acquisition, is nearly as important as the target-selection phase, say experienced buyers (see "It's Not You, It's Your Technology"). A good deal on paper can easily fall apart during the postdeal marriage of the two companies.

Timing is everything in the integration process, says Charles River's Ackerman. "The longer you stretch it out, the harder it becomes to change certain practices," he warns. To lay the groundwork for a speedy integration, CRA establishes a full integration team before a transaction closes. Cooper emphasizes the importance of facilitating interaction between employees at the two companies as quickly as possible. And in an E-mail culture, he adds, it's important to make the time for face-to-face meetings. "I know how quickly people can get ticked off, and how quickly [situations] can become emotional," when plans are misinterpreted or misunderstood, says Cooper.

Wells Fargo gives itself enough time to do integration properly, by stating in every transaction announcement that the deal will be accretive to earnings within three years instead of the typical one year. "Rather than assigning an arbitrary time frame of one year and running the risk of cutting expenses arbitrarily to rationalize the purchase price, we want to take the time to do it right," says Atkins. The company's acquisitions typically become accretive well before the promised three years, he adds.

To ensure the smoothest possible integration, CFOs can take another lesson from the private-equity sector. Private-equity investors typically develop 120-day plans, says Jeffery M. Bistrong, a managing director at boutique investment bank Harris Williams & Co. in Boston, who suggests such a tool for CFOs. "These are very detailed plans that explain how management teams are going to be integrated, what the operating metrics are going to be, how management will be measured, and what changes need to be made," says Bistrong. After combining with Inveresk, Charles River employed a similar strategy, working with an outside firm to manage the integration process for the first 100 days, says Ackerman.

All this, of course, is not to say that experienced acquirers don't stumble from time to time. Despite careful selection and planning, an acquisition may ultimately fail to deliver value. "You have to be both lucky and good," says Cooper. "If you do it right, it almost looks easy."

Almost.

Kate O'Sullivan is staff writer at CFO.

Practice Makes Profits
Bain & Co.'s research on why deals fail shows that frequent acquirers have a better chance of creating value from acquisitions. Below are the most active buyers from the period studied, 1986-2001. Aside from Wells Fargo at #6, three other companies features in this story — Clear Channel Communications (#31 with 41 acquisitions and a 36 percent average annual total shareholder return for the period), Dover (#35 with 38 deals and 15 percent TSR), and VF (#208 with 14 deals and 10 percent TSR) — also make the list. — K.O'S.

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