Successful integration of a merger or acquisition is complicated by the fact that no two deals are alike. What worked in a prior deal is not a guarantee or template for your next deal. The following areas present the greatest challenges for your company to execute a successful integration.
Failure Related to Missed Opportunities. Some companies fail to define a deal’s source of value and associated risks which results in poor priority planning for the integration process. Others do not fully plan the integration process before the deal is announced, which allows identification of priorities that can be executed prior to closing so the integration team can move swiftly once the deal closes. Lastly, the base business must be monitored and not “lost” in the shuffle to integrate the two entities. Poorly executed migrations and lack of coordination in customer communication may result in lost business.
- People and Cultural Issues. Companies often don’t act quickly enough to address and communicate the new organizational structure and leadership team. This may result in talented associates sensing doubt about their place in the merged entity and looking for employment elsewhere. The merging of two cultures being brought together in a new entity must be implemented in day-to-day activity, and monitoring of core values should be reinforced and rewarded.
In order to overcome the challenges identified above, the following five steps will enhance your organization’s chances for a successful post-merger integration.
- Start Integration Planning Ahead of the Acquisition. Integration planning is not an iterative process, it is a continuous effort that begins before a deal is closed. Proper planning in the pre-closing phase should be part of the due diligence process, as issues will be identified and addressed as part of the deal closing package. Once a deal is closed, integration planning should be considered a sustainable process that becomes part of the daily management routine.
- Clearly Define the Reason for the Deal. Every deal has an overriding reason for consummation. Whether for entree to new markets/business lines or becoming a leader in established markets, proper definition of the deal value and related risks will guide the appropriate actions required to be successful. It allows integration stakeholders to properly structure the activity required to meet the desired values and communicate to the entire organization so the goals to be achieved are clear to everyone.
- Identify Your Culture. Regardless whether the desired culture reflects the acquiring company, the target company or a combination of the two, it must be clearly defined and put into practice at the highest levels of the merged organization. Key leadership and management positions should reflect decision-making practices that align with the desired culture and carry throughout the company.
- Resolve Leadership and People Issues. Once the reason for the deal is clearly defined, people from the acquiring and target entities who reflect those attributes associated with the deal and culture should be identified and placed in leadership positions. A structure of resources below them to carry out the day-to-day activities can then be completed as quickly as possible to avoid unwanted loss of talent.
- Commitment of Resources. The integration team must be fully committed to implementing the plan in a timely fashion and should be considered a full-time job. If a determination is made that there is a lack of internal bandwidth to carry out the integration, outside resources with the expertise to get the job done are readily available.
Following these guidelines will provide a structured approach to a successful integration, and how to apply them based on the facts and circumstances of your deal.