Pre-Deal to Post-Merger: Key Opportunities for The Front Office in M&A

Orla Lavery, Rob Owen, Greg Faragher-Thomas
Your corporate development team thinks a deal works in theory, how can we ensure it will successfully deliver value?

Closing the deal is only the first step in the delivery of a successful merger. Integrating Front Offices with large headcount costs and complex infrastructure offers the opportunity for significant synergies. However, combining the two investment teams, requires substantial effort and planning that starts before the deal is signed.

Having led some of the most complex end-to-end integrations in the industry, Alpha has identified several considerations which will help contribute to successful integration.

Key Considerations

Merger & Integration Planning

Identifying value creation opportunities at pre-deal increases the likelihood that shareholder expectations will be met. Deriving synergies from investment teams is often prioritised due to the significant operating cost within the function. The speed at which the businesses can be integrated is key for the market’s perception of success, and delays to the integration plan are often costly. Proper planning and implementation expertise are essential but many organisations lack the internal capacity to support the full change effort.

People & Culture

Consider staff retention strategies and address difficult questions up-front to mitigate against the flight of key personnel. Entities should consider the efficiency and cost implications of ‘golden handcuffs’ to ensure greater stability and continuity in investment performance, but balancing knowledge retention and realising headcount synergies is vital for smooth integration. Throughout the change process, communication that is unified, transparent and carefully managed is required to foster collective support of the integration.

Data & Technology

Before signing, assess the availability, quality and processing capabilities of each organisation’s data to ensure a smooth integration. Each entity will rarely have a complete view of its architecture but understanding this is crucial for effective integration planning. To provide consistent data to the merged investments teams, the underlying data must first be aligned. It is likely that the two Front Offices will have different capabilities, technologies, and maturities of data architecture. If done successfully, systems integration can optimise and simplify the processes of the merged entities, but this change requires thorough due diligence, a rigorous selection process and appropriate levels of training.

How Can Alpha Help?  

Pre-Deal Expertise: Alpha’s pre-deal expertise combined with our unparalleled knowledge of asset and wealth management industry allows us to help position your business and merger partner for integration success.

 

Vendor Expertise & Knowledge of the Front Office Landscape: As industry specialists and Front Office technology experts, Alpha has strong relationships with Front Office software and data vendors. This allows us to support critical business decisions and support market-leading transformations.

 

Planning and Delivering Integration Success: Alpha is experienced in planning and delivering large-scale integration programmes. From defining the target state, moving suppliers or creating best-in-class platform functionality, Alpha can not only help you plan for success but also deliver it.

About the Author

Orla Lavery, Rob Owen, Greg Faragher-Thomas

Orla is a Consultant at Alpha with a range of experience across the Asset and Wealth Management industry. She has supported some of the industry's most significant digital transformation programmes in recent years and has experience in developing strategic FX initiatives for investment managers.

Rob is an M&A specialist within the Alpha M&A Practice. He works on transactions which will result in a significant change to the ongoing business, either as a result of an integration and delivery of synergies or as part of a divestiture and carve out. Rob has worked on over 50 transactions, including some of the largest asset management deals in the UK.

Greg is an industry-known expert across front office issues and the major platforms. He has led numerous Alpha projects assessing front office systems and architectures, has led teams in designing new technology operating models and in implementing new front office IT and PMAR systems.