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Mastering the Integration of Mergers & Acquisitions

In today’s highly competitive, global markets, mergers and acquisitions are critical for profitable and sustainable growth of a business and to refocus corporate portfolios on value-generating and core business activities. However, many companies often fail to achieve a successful integration and more than 50% of such deals even decrease profitability in the long term and destroy value. So, here are some key pointers to be kept in kind for mastering the integration of mergers and acquisitions:

• Plan before announcing the deal: Ideally, the integration process should be planned even before the deal is announced. This way, you can take care of several priorities that need to be addressed immediately and identify matters to be taken care of prior to the close. One way to speed up things is to get a team, whose members work under confidentiality contracts and other legal procedures, and can evaluate competitive data that would otherwise not be available to the acquirer's employees.

• Use a DMO to manage integration: Instead of creating too many processes and templates to manage an integration that will distract people from critical issues and suck the energy out of everyone concerned, use a Decision Management Office (DMO), where integration leaders focus the taskforces and steering group on critical decisions. These integration experts will create a decision roadmap and direct the organization to make sure that every decision is taken at the right time and by the right people who use the best available information to arrive at the decisions.

• Pick the leaders of your integration team judiciously: A successful acquisition or merger should have a strong leader at the helm who has the power to coordinate taskforces, and the authority to make triage decisions, thus setting the pace. So, pick your integration team leaders from individuals who are strong on strategy and content, and form an integration taskforce that can help you to complete the process successfully.

• Stick to one culture:  A big challenge of almost every merger or acquisition is determining about the company culture. Though the acquirer usually prefers to stick to its own culture, it may sometimes introduce certain aspects of the target company’s culture into its own. Whatever be the decision, the company should have one culture and create decision-making standards and an organizational structure that match this new culture.

Apart from these above pointers, making people on both sides comfortable with the process is also crucial for a successful integration as mergers and acquisitions often give rise to uncertainty and doubts in the minds of people. So, focusing on how people will fit into the new set-up is important to win hearts and pave way for success.

Lastly, it’s important to continue momentum in both companies’ base businesses and supervise their performance closely. Since it’s common for the management to get distracted and caught up in the integration process, not keeping a keen eye on the base business of both companies will ultimately cause the organization to suffer. Therefore, separate teams should be entrusted with managing the integration and the ongoing business so that the integration process is completed successfully.

Comments Listing
Posted: 13/03/2013 09:31:29

Very informative and highly useful tips.

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