Elizabeth Gerbel, CEO and founder of Houston-based E.A.G. Services Inc., shares how to navigate M&A activity for both startups and large companies. Pexels

Nervous about an upcoming merger or acquisition? You're not alone. Last year, there were nearly 15,000 mergers and acquisitions in the U.S., according to the Institute for Mergers, Acquisitions and Alliances. These transactions, although executed with optimistic intentions, don't always work out. What is it that separates those that deliver from those whose results simply fall flat?

While you won the legal battle, the real culprit to a failed merger or acquisition transaction lies in post-deal activities such as integrating the divesting company's assets into the acquiring company's existing systems, processes, and organizational structure. If executed poorly, companies could face several hurdles, including:

  • Increased acquisition costs
  • Loss in previously efficient business processes
  • Reduced data quality in current and acquired assets
  • Extended TSA timeline

With the stakes being high, it is critical for each step of a merger or acquisition to be rock solid before moving on to the next stage. In fact, when executed successfully, an M&A transaction can significantly benefit both companies — from startups to well-established corporations.

A strategy for M&A data integration

In order to facilitate efficient and effective merger or acquisition, the critical success factors focus on these driving goals: Minimizing organizational disruption and Maximizing ROI. To achieve these goals, we execute three main stages for every merger and acquisition.

  1. Planning
  2. Analysis
  3. Execution

We start with thorough planning, think of planning as the foundation for a successful merger or acquisition. Without a good plan, the company will be vulnerable to all sorts of structural weaknesses. To prevent key elements from falling through the cracks, companies must define objectives and data requirements, maintain strong communications, and develop both short-term and long-term expectations.

The next step – analysis – since data is absolutely essential in mergers and acquisitions. There is a lot to watch out for: What's the best way to extract and convert the acquired data? Will IT or business support need to be permanently added? What system configuration changes are required? What are the impacts to current business processes and internal audit controls? Will additional training be required? The answers to these questions are highly individualized to each merger and acquisition, and they'll impact how seamless the transition will be. Many people gloss over this stage but then realize the criticality not only in the case of a merger or acquisition but also in the case of a future divestiture.

Finally, the last stage: Execution. This stage is one of the main reasons why some mergers and acquisitions may fall short of expectations. To avoid common issues stemming from poor execution – including disruption of previously effective business processes, impaired customer service, and increase in the cost of the merger or acquisition – we coordinate roles and responsibilities, ensuring that all key tasks are executed. From day one to full integration, we continually monitor to ensure the company is on track to meet its initially defined objectives.

The risks and benefits of a merger or acquisition

I'll be candid: Without a solid foundation through adequate preparation, a merger or acquisition is set up to fail. This risk can be higher for startups and small companies, which don't have the resource buffer that some larger firms can fall back on. Large companies may face a different risk, business processes and data may not be aligned with their current state. And yet, according to Economy Watch, an extensively strategized merger or acquisition transaction, beyond increasing the company's size, can yield significant benefits that include:

  • Improving its strategic position
  • Entering a new market
  • Developing new assets
  • Lowering operational costs
  • Expanding market influence

For smooth mergers and acquisitions, we recommend a multi-step process so that you can identify and reduce risks, condense your integration timeline, and quickly capture value. Because despite the challenges, not all is lost during a merger or acquisition – and there is much to be gained.

------

Elizabeth Gerbel is the CEO and founder of Houston-based E.A.G. Services Inc.

Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

UH research team receives grant to fight aggressive pediatric cancer

cancer research

Researchers at the University of Houston have received a $3.2 million grant from the National Institutes of Health to help find innovative ways to treat Rhabdomyosarcoma, or RMS.

According to a statement from the university, RMS is a malignant soft tissue sarcoma that has a higher incidence in young children and is responsible for 8 percent of pediatric cancer cases with a relatively low survival rate.

One way UH is working on the issue is by studying how and why RMS cells, which are found most often in muscle tissue, divide uncontrollably without ever maturing into normal muscle cells. The researchers aim to tackle a target inside RMS cells known as TAK1, which plays a key role in regulating cell growth.

“By targeting TAK1, we aim to stop the cancer at its source and help the cells develop normally,” Ashok Kumar, the Else and Philip Hargrove Endowed Professor of Drug Discovery at the UH College of Pharmacy and director of the Institute of Muscle Biology and Cachexia, said in a news release. “This approach could lead to new and better treatments for RMS.”

According to UH, preliminary results demonstrated that TAK1 is highly activated in embryonal RMS cells, which are found in younger children; alveolar RMS cells, which are found in older children and teens; and human RMS samples. This suggests that the protein plays a major role in the development of this form of cancer.

The team still aims to uncover how the protein helps RMS cancer grow and plans to evaluate how blocking TAK1 can be used as a therapeutic.

“Blocking TAK1, either by changing the genes (genetic approaches) or using drugs (pharmacological approaches), can stop certain harmful behaviors in cancer cells,” Kumar added. “This was tested both in lab-grown cells and in living models, showing that TAK1 is a key target to control RMS cancer’s spread and aggressiveness, and inhibits tumor formation.”

Texas A&M expands innovative Dog Aging Project via $7 million grant

pet project

The Texas A&M College of Veterinary Medicine and Biomedical Sciences has received a $7 million grant from the National Institutes of Health to support its Dog Aging Project.

The DAP is a research project that was launched in 2019 by Texas A&M and the University of Washington School of Medicine and has enrolled over 50,000 dogs to date, according to a release. The program studies various breeds of companion dogs and studies the effects of aging to help develop a better understanding of what can lead to an expanded, healthy canine life, which can also assist with human aging knowledge.

The NIH funds will be used to expand a clinical trial studying how the drug rapamycin, also called sirolimus, can extend the lives of companion dogs.

The project, known as Test of Rapamycin In Aging Dogs (TRIAD), is the third DAP clinical trial involving the drug rapamycin. The drug has previously been used as an immunosuppressant during organ transplants in humans. Past DAP studies reported that the drug appears to improve cardiac function in dogs.

“Rapamycin works by modifying the cells’ energy balance and energy handling,” Dr. Kate Creevy, DAP chief veterinary officer and a professor in the VMBS’ Department of Small Animal Clinical Sciences, said in a news release. "It seems to mimic the effects that happen in people or animals who do intermittent fasting. There is a lot of interest in intermittent fasting as a technique that can improve health, particularly healthy aging, and some of the pharmaceutical effects of rapamycin make the same changes at the cellular level.”

So far, 170 dogs are in the trial at 20 sites, with the goal of expanding to 580 dogs enrolled in multiple cities across the country. Dogs must be over 7 years old and in good general health to participate. They should also weigh at least 44 pounds. Owners are required to bring their dogs to one of TRIAD’s participating clinical sites every six months for three years. The Texas clinical sites are in College Station and North Texas.

“Dogs experience many of the age-related cognitive, sensory, neuropathologic and mobility changes that are common in older humans,” Dr. May Reed, a geriatrician at the University of Washington School of Medicine and another primary investigator in the study, said in the release. “The possibility that rapamycin might delay any of the alterations that contribute to cognitive impairment and functional decline is very exciting and has huge translational potential.”

“We get to learn how to support both dog and human aging at the same time. Our research is also powered by owners’ commitments to the health of their dogs, and that’s what makes our work both possible and meaningful,” Creevy added. “We’re very grateful to them.”

Houston unicorn startup named North American Company of the Year

top honor

Houston-based geothermal energy startup Fervo Energy has been named North American Company of the Year by research and consulting firm Cleantech Group.

Fervo appears on this year’s Global Cleantech 100, Cleantech Group’s annual list of the world’s most innovative and promising cleantech companies

Houston companies Syzygy Plasmonics and Vaulted Deep also made the Global Cleantech 100 list this year.

“These innovators give us reasons to be optimistic about the future. Their groundbreaking work demonstrates that progress toward net-zero remains possible and inspires us to double down on the challenge of addressing climate change,” says Richard Youngman, CEO of Cleantech Group.

Fervo was honored during a Jan. 27 awards dinner at Cleantech Forum North America, an event hosted by Cleantech Group. Co-founder and CEO Tim Latimer accepted the North American Company of the Year award on behalf of Fervo.

“We have always been honored to be part of the Global Cleantech 100,” Latimer says in a LinkedIn post. “Being recognized for the fourth consecutive year and named the ‘North American Company of the Year’ is a testament to our relentless pursuit of innovation in the energy sector. The demand for clean, firm power has never been more urgent, and we are proud to lead the way.”

Founded in 2017, Fervo is now a unicorn, meaning its valuation as a private company has surpassed $1 billion. The startup’s valuation is estimated at $1.4 billion. According to PitchBook data, the company raised $634 million in VC funding in Q4. Read more here.

--

This article originally appeared on our sister site, Energy Capital.