Mergers and acquisitions take a lot of work. Weeks or months are spent in due diligence, examining as many aspects of a potential acquisition as possible before a decision is made on whether to pull the trigger on the deal.

But the real work begins after a deal is closed and the integration of the new business begins. Integrating an acquisition into an existing company presents a wide set of challenges. And because no two deals (or companies) are alike, each integration is unique and requires its own set of solutions.

Industrial Distribution talked to executives at several companies with experience integrating new purchases into their respective corporate folds. Each said that, while every integration is different, there are a few key factors to keep in mind when the time comes to bring a newly acquired company into your organization.

When it comes to mergers and acquisitions, Brian Etter knows the game from both sides of the table. The president of White Cap Construction Supply, a Costa Mesa, Calif.-based division of HD Supply , Etter has played the role both of the acquired and the acquirer during his career.

So when it comes to integrating a new acquisition, Etter has a unique perspective on the process.

“The one true key for us is thoughtful planning and due diligence prior to close. The other is to make sure you are clear in your communications that the change will happen, and to set realistic expectations,” he says. “It's better to be straight and say, 'Here's how we see it, here's the plan and here's the expectation,' and then execute to it. [Having been] on both sides of the transaction enables us to have a more balanced approach to integrating businesses.”

Etter has overseen the company's aggressive acquisition strategy during his nine-year tenure at White Cap—the company grew from 12 branches to 77 during that time and integrated 20 acquisitions in three years. HD Supply, the wholesale distribution arm of the Home Depot , bought White Cap in 2004 and wasted no time hitting the acquisitions trail. White Cap has acquired 12 companies since its purchase by HD Supply.

Experience has shown Etter that no two acquisitions are the same, meaning every integration presents its own set of challenges.

“You can't do the 'one size fits all' approach and just hammer a standardization through,” he says. “Our approach with each acquisition is first, do no harm, then learn the business and give them the tools to integrate.”

And if a business has risen to the point where it's an attractive target for White Cap, it has become adept at doing a number of things well that can be incorporated into White Cap's best practices, Etter notes.

“If they're a quality company or rise to the top as a business, then they do a lot of things right,” he says. “We can then introduce that into the rest of the organization.”

From the other side of the acquisitions table, Etter notes that selling a company is often the first experience a business owner has in the mergers and acquisitions arena.

“Often if you are a seller, it may be the only time you've gone through this type of project, so it's all new to you and that really gets you sucked into the whole buzz of the transaction itself, and you start marching toward the goal line,” he says. “It's very important to take a step back and look at it and ask questions—the what, the when, and the how—so you have a better comfort level when it comes time to close.”

“It's important that when people look at their options, whether it be joining an organization like ours or buying another for themselves, that they look and evaluate what the next chapter of their business means to them,” he adds.

White Cap is busy on two fronts in the integration area, bringing newly acquired Burrus Construction into its organization while beginning to rebrand itself under the HD Supply umbrella. Etter says the Burrus integration is moving faster than expected, with enthusiastic support from Burrus's former management team, which joined HD Supply after the transaction.

The migration of the White Cap brand to HD Supply is moving at a slower, more phased pace. The first step is to link White Cap's traditionally strong customer service focus with the HD Supply name, Etter says.

“While we're under one common umbrella brand, we still have different operating models and a differentiated customer base and marketing strategies,” he says. “It would have been a mistake for us to just have rushed into dropping [the White Cap brand].”

Arleen Llerandi, HD Supply's vice president of marketing and communications, says the company's overall rebranding is designed to unify the acquired companies' images under a single banner.

“All of these companies that HD Supply has purchased have great corporate reputations and strong brands. As we acquire more and more companies, the message starts to get confusing,” Llerandi says. “In order to try and unify those various businesses under one flag, we decided to rebrand.”

Deciding the pace of each integration into the brand is left to the leader of each business, she adds. Those leaders are often key management personnel like Etter who stay with their company after its acquisition by HD Supply. Llerandi says retaining management is a key part of the company's integration strategy.

“These businesses for the most part are rather local in nature, so we want to make sure we retain that continuity. We don't go in there and change management. These businesses in the industrial space are relationship-based, so we do everything we can not to lose that continuity and expertise,” she notes.

“It's important that these wholesale businesses retain their local touch in everything they do. We don't want to take them away from what they do best, which is connect to their customers and relate to their customers. That's one thing we try to keep intact. We don't mess with the front line, we just give them the tools they need to succeed.”

Rick Hamada, COO of electronics company Avnet Inc. , says keeping an acquisition's management team on board is a priority for his company as well.

“We approach all of these very strongly with what we consider to be a proven methodology of 'best people and best practices,'” Hamada says, adding, “Let's assume that Avnet doesn't have all the best ideas in the world.”

“We should learn from [an acquisition's management] not lose [their knowledge] as we integrate. We really try to live to that.”

Since October of 1998, Avnet has acquired 19 smaller entities from around the world. Hamada says the company considers three dimensions when evaluating prospective acquisitions.

“We look at a fit on a cultural basis, we look at a fit on a strategic basis and we look at an expectation of a certain return on an economic basis,” Hamada says.

Once the company decides to move forward with an acquisition, Avnet decides whether to fully integrate the new purchase or let it stand alone. That decision is made on a case-by-case basis, Hamada says.

“We don't have a 'one size fits all' example,” he says. “The decisions about folding in versus keeping separate are really a consequence of the strategic evaluation,” he says, citing two recent acquisitions: Avnet's July 2005 purchase of Memec International, a semiconductor supplier, and the acquisition of Sun Microsystems products supplier Access Distribution late last year.

In the Memec deal, Hamada says Avnet acquired a company that had “a heavy degree of overlap” with Avnet's structure and organization.

“The total synergies duplicated $150 million in resources, be it facilities, warehouse structure, or IT,” he says.

That meant a fairly in-depth integration process to eliminate any duplication. But in the Access deal, where the total synergies are roughly an order of magnitude lower than in the Memec transaction, Hamada says the merger will be more like a bolt-on acquisition than a pure integration.

“The strategy around this is there's much less synergy focus,” he notes. “We've targeted more in the order of $15 million in synergies. We're bolting on a nearly $2 billion relationship with Sun. We are going to very much maintain a lot of those resources.”

Another factor to consider during integration is IT systems. Making one company's systems work with its new parent's systems can pose one of the most daunting challenges to a successful integration, potentially costing hundreds of thousands of dollars.

For Justin Foster, vice president of client services for business software provider NetSuite , the key issue in integrating systems is not the systems themselves but the data they contain. Determining what data to transfer from a legacy system to the new company's platform is the first step, Foster says.

“It's less about the systems and more about the data. How compatible is the data, whether you're looking at a services firm and utilization and time data, or a distribution firm with SKUs and sales data?” he notes.

To that end, he advises making sure you carefully examine a potential acquisition's data during due diligence, earmarking the data you plan to migrate into your existing platform.

Carlos Galarce, senior vice president and CIO for business software provider Infor , says the data you decide not to bring on board should be stored in a virtual “warehouse.”

“Any time that you have current customers [data], you bring that as whole as possible into the operating system, but a lot of times the data is incomplete. If the data is incomplete, you leave that in a separate system,” Galarce says. “We move that into a warehouse where we still have access to it...We never leave data stranded. We also leave the legacy system for seven years, so if we need to get anything out of it we can get to it.”

Integrating an acquisition is also an ideal time to upgrade your systems to a single, all-inclusive platform that serves all your needs, Foster says, adding that many small and mid-sized distributors are still operating older “green screen” systems that aren't compatible with more modern platforms.

“[Integrating a new company] is an opportunity to reform SKUs, etc. It's definitely easier going many [systems] to one than going many to many,” he says.

As an example, Foster cites a distribution customer he's working with that bought three companies in the past year, each with a different platform and an enormous SKU list. After the first acquisition, the company decided to upgrade to a single, unified platform and migrate its acquisitions' data into the new system.

“For them, that's where they put their money, into merging those SKUs in an intelligent, flexible system,” Foster says.

Meshing two corporate cultures may be the biggest challenge in any integration. Avnet's Hamada says his company looks for a good match between Avnet's performance-based culture and a potential acquisition's culture.

“We consider our culture a performance and values-based culture, and we do actually communicate and advertise core values around Avnet. They're much more than plaques on a wall,” he says. “If an entity is much more [oriented] around individual 'rock star' performances and not teamwork, that's going to be much more of a challenge [to integration]. It doesn't mean it's a no-go, it means we have to address it. Some of our more challenging integrations come down to a challenging integration of cultures.”

Foster says one aspect of integrating cultures involves moving personnel from one IT system to another.

“One of the top things that you always look at in an acquisition as part of a due diligence is people and the cultural fit. The systems play a big piece of that,” he says, citing the example of a distribution company buying another, where the sales staff at each company likely use different platforms for quotes.

“Making sure that both sales teams are going to be able to adopt a new system—how well are they going to handle that change management? Don't underestimate the change component of merging systems.”