Merger & Acquisition (M&A) integration is often seen as something that happens after the deal is done, but it must happen in line with due diligence, strategy development and negotiations in order to be effective. Otherwise, you’re rolling the dice when your integration goes live; there’s nothing in place to prevent missteps, poorly managed changes or increased costs — and even greater risk of a failed deal.
This insightful article explains how companies can successfully integrate their new business units by applying a few easy steps throughout the M&A integration process, helping your potential for business growth and future success.
What is M&A Integration?
M&A integration, or Post Merger Integration (PMI) is the process of uniting two or more companies with an aim to create one stronger business, maximise synergies and boost results. This ensures that the deal lives up to its predicted value after it has been closed. It can also be referred to as post acquisition integration. Your company might require PMI when it acquires another business, merges with another company or partners with another entity in a joint venture. To ensure that this process goes smoothly and your company comes out better on the other side, you should consider some of our essential tips.
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The Importance of an M&A Integration Plan
After a merger or acquisition, the natural tendency is to focus on “getting going” and minimise time spent exploring how the two firms should merge. However, taking a little extra time at the front end of an integration process for strategic planning can make a big difference in maximising opportunity and minimising risk.
The main objective of getting the merger integration right is to create a unified company that delivers value. When the two companies are brought together, there is a lot of change as systems and processes come together as well as cultural differences that surface. In order for this transition to go smoothly, extensive planning before the merger is required. Keep reading for some of our key steps to the integration process.
Post Merger Integration Process: 4 Key Steps
Plan Your Hiring Process
In the long-term, hiring great new employees is critical to the success of your business — so don’t underestimate it. If you have a robust plan in place for hiring the right people after the merger or acquisition, it paves the way to having an M&A integration that is successful, efficient and profitable.
If you’re only focused on the day-to-day work and not about bringing in new talent, you could be setting yourself up for failure. An M&A integration calls for a long-term approach and a short-term approach, so don’t neglect it to save money. By planning your hiring process carefully, not only will you avoid making costly mistakes but you’ll also ensure that the right people are in place to help your company achieve its goals.
After a merger, it is important to address the potential for overlap or redundancies. This includes figuring out which tasks are best completed by your team and which can be outsourced. If you have an employee who has multiple roles now that certain duties are being merged, it may make sense to find one person to take on all of those duties. If your company is large enough, it may make sense to outsource certain functions. This will free up additional resources to allow your team to focus on other tasks.
Successful M&A integration relies heavily on well-thought out technology governance, not only in the immediate aftermath of an acquisition but also during the pre-acquisition due diligence. The past few years have shown that initial cost savings quickly turn into much larger expenses when poor decisions are made around integrating technologies, thus creating distractions for employees and delaying revenue growth.
Review Employee Performance
Post M&A integration is a critical step in the acquisition process and it takes extra care to ensure that both the companies are able to function as one unit. This means that several employees have to go through performance review to understand their potential, both individually and collectively.
Post merger integration performance reviews allow your managers to be well prepared for any changes that may be required. This means that some employees might need more support, while some others are very capable on their own. These performance reviews are necessary to ensure that your company is able to function as one unit after merger integration takes place.
Who Is Responsible For Post Merger Integration?
Now that you know the key steps, who is actually responsible for implementing post-merger integration? Is it the marketing team or the finance department? Is it the diligence team that pulled together the acquisition or is it the organisation that sits on top of all things financial? How about IT, legal, operations and HR?
Many argue that each employee should take responsibility for integrating a merger as part of their everyday work. And if they do not, then they are not doing their jobs. This idea creates synergy between all parties involved in the merger or acquisition, ensuring everyone follows the M&A integration plan. Lawyers with their due diligence, the accounting team with their audits and accounts, the salespeople with gaining access to more customers, but also every single employee of the companies involved in integrating the two entities hold some responsibility for the integration process.
M&A Integration Software
An M&A integration software is used to streamline the process of integrating two companies. When every step of the merger has been precisely documented, workers won’t be guessing about what they should do next. The best thing about using an M&A integration system is that many of these programs can actually integrate with existing information systems to avoid wasting time tracking down redundant data.
Mergers and acquisitions can be a confusing process for companies. Therefore, the first step toward a successful merger is a good integration plan. Many processes will need to be completed in order to have a smooth transition from one company to the next.
Need Expert Support With Your M&A Integration?
We know that M&A integration can be confusing, which is why we’re here to help. Our expert Business Consultancy Services can support you through every step of your business integration planning and execution process. Contact us today to find out more!