Mergers and acquisitions are rife with risks. The acquiring company may lose focus when it joins another business. It may lose key staff members from one or both companies, or the finances may suffer. Buyers need expert M&A support to consider the risks and synergies, drive value, and create an integration plan as soon as the negotiations begin.
Across the transaction’s lifecycle, the post-merger integration strategy is a critical process that ensures a successful merger or acquisition. While a failed integration may result from overpaying and incorrect valuation, here are the four keys to a successful post-merger integration strategy.
- Right Timing
No two deals are the same. Therefore, each transaction involves unique and complicated challenges to gain its full potential. Realizing and managing the integration activities is crucial for a successful merger. A rigorous approach drives the deal’s success, minimizes risk, and prevents missed opportunities. For instance, an integration process that takes too long may lose focus and affect profitability. Therefore, the key is to start the post-merger integration process as soon as the deal occurs.
Pre-close requirements and considerations might involve financial operations, management structure, technology, material contracts, and intellectual property. They may also extend but are not limited to corporate documents, data room, insurance coverage, litigation and tax matters, and employee and customer retention. Making critical decisions ahead of time with proper M&A support enables business operations to begin immediately.
- Integration Structure
Another key to a successful post-integration strategy is to divide the integration structure into functional departments. These include sales, service, manufacturing, HR, finance, IT, legal, and finance. A multi-disciplinary team may also play a crucial role in cross-functional categories to bring the desired results and synergies.
Choosing skilled and motivated employees from both companies makes the right integration team. Assign specialists in particular areas to outline and perform functions according to their expertise. This strategy involves users and experts in the process, making the integration smoother and faster. Watching signs of dissatisfaction and fatigue in the team members minimizes the risk of losing talent.
Most importantly, the business must clearly define its post-integration strategy. Assigning tasks, giving specific timelines, and allocating accountability is crucial to successful integration. On the other hand, a poorly planned integration structure often leads to turmoil.
The M&A’s leadership should stay consistent while communicating its goals, risks, and changes expected from the transaction. Focusing on the deal benefits rather than synergies can help avoid moral stressors within the organization. Synergies are often associated with cost reductions and layoffs. Therefore, the primary focus should consistently remain on the transaction benefits. It is an excellent way to win hearts and motivate the team.
- Exit Criteria
Clearly defining the exit criteria lets everyone know when the merger is officially complete. Accordingly, the team members can work to achieve that goal within the set timelines. The exit criteria must include HR, accounting, finance, legal, IT, sales, marketing, and operations. All integration teams must have clear exit criteria to determine when their integration is complete.Successful integration is a complex initiative a company may ever undertake. The secret to assuring post-merger integration success is to get M&A support from experts. It helps the company stay focused, begin early, and drive value to make the integration plan a sure hit.