The Art of M&A Integration
M&A activity is often biased toward closing the deal. Company executives review strategic implications, define expected results and analyze financial projections. Consultants and functional experts perform due diligence. Brokers and bankers model business synergy and valuation. The legal team works out contractual details. When the deal finally closes, the vast majority of these people move on to their next challenge – leaving a business unit manager and corporate staff functions to actually engage with the new group, ensure functionality between business systems and, most importantly, deliver on the promised results.
There is often no formal integration process – this is typical of less sophisticated acquirers and acquisitions which claim no anticipated changes in a “merger of equals”. Unfortunately, this initial independence is short lived as various corporate functions start expecting information in the format used by the acquiring company. Next, these same well intentioned staffers expect compliance with corporate policies and procedures. This will likely impact budget and hiring approvals and may extend to more critical business processes like customer terms or credit approval. While all these changes seem reasonable to the various staff groups - the cumulative effect on the acquired company is at least a diversion of resources to deal with non-value added administrative tasks and at worst a direct violation of their expectations and trust. The most destructive changes occur when organizational decisions and HR policies combine to impact reporting relationships, titles and compensation. Coupled with the more benign administrative issues and an information vacuum – the intended synergies of the acquisition are quickly forgotten – replaced by uncertainty about levels of authority, long term job security and outright mistrust.
It is never wise to assume or communicate that business will continue as usual for the acquired company. The reality is that many things will change with an acquisition and this needs to be communicated and planned well before the deal is signed. The most critical elements of an effective integration plan include:
- Common Objectives
- Early Integration Planning
- Resource Allocation
- Fast Decision Making
- Effective Communication
- Strong Working Relationships
- Expect Problems
For additional details on these elements, see my white paper at:
http://www.strat-edg.com/files/The_Art_of_M_A_Integration.pdf
