What makes a successful merger and acquisition?
For Kay Curling, the Chief Human Resources Officer (CHRO) at Salient Federal Solutions, Inc, the key is consistency.
The M&A guru has facilitated 19 transactions — five in her current post, and the remaining with three area federal contractors, where she developed the consistent M&A regimen she now swears by.
It’s been three years since the Virginia Tech alumna joined Salient Federal Solutions during the company’s inception in 2010, and her experience with the phenomenon is critical in a government contracting industry laden constantly with merger and acquisition activity.
Curling chalks up her team’s success to its tried and true due diligence process in the face of merger and acquisition activity, which ensures the team does not become overcome with, what she called, the thrill of the hunt. She cautioned that contractors in search of quick growth who rush to complete deals without implementing a plan at times shortchange critical components of their strategy.
“The thing that is so different about Salient is that our philosophy and practice brings together a highly experienced, cross functional team of experts to work in harmony through all phases of a purchase and integration. Our M & A team is engaged together from the very beginning when we start talking about the company we’ll potentially buy… through the successful transition when we either decide not to buy the company or ultimately decide to buy and bring those employees onboard,” Curling told WashingtonExec last month in an interview. “This core M&A team is the same for every acquisition. Our process is disciplined, detailed and repeatable. Everyone on the team understands the importance of his/her role in the process. It’s incumbent upon each of us to make sure that we identify the risks that are associated with the transaction and closely examine the value the deal will bring to our shareholders, our current customers and our employees.”
The due diligence process is critical because it provides the management team with the ability to deeply assess and understand what it is buying which, ultimately, determines the success of the potential acquisition.
But Curling cautioned that a successful due diligence does not necessarily result in a sale.
“There are times where you are doing your homework on the company that you want to buy and you determine that it is not a good fit so you shake hands, you part friends and you don’t buy the company,” she said. “There are other times where it turns into a successful buy, sell transaction.”
Mergers and acquisitions at times fail to produce the value promised to shareholders when, Curling said, that disciplined process and consistency has not been established.
She noted that those courting sellers have an obligation to understand the hard and soft sides of the business. The soft side begins once the team has completed the hard due diligence process of discussing financials, contracts and risks associated with the venture.
Soft due diligence revolves more around intangibles – people, cultural fit and core values. “Our business decisions are grounded in and guided by our core values. A purchase must produce value to the combined set of clients, the combined group of employees and our shareholders. It also must also be culturally appropriate, so that the side that is being acquired will more easily fit into our employee family,” Curling said. After the close of the acquisition the team is tasked with educating the buyers, sellers, employees, clients and other stakeholders with information about the new services, expectations and how the change will affect each of them in the future.
“Lots of times when a company is acquired they will be left alone to operate as they had previously or they will be stove piped into the organization. Our practice is to integrate fully basically on day one,” Curling said. “We bring those employees into the Salient family with the benefits and privileges of all of our employees. We want to make sure that they really feel a part of the experience and that the clients perceive additional value immediately as a result of the acquisition. Our philosophy of a Day 1 integration is important to building trust and encouraging engagement.”
Be sure to read The Curling Clan, our story about Kay and Melissa Curling, and the families of government contracting.