Post-Merger Integration Issues, Problems, and Challenges Caused by the 10 Mistakes
 

  1. Little or No Pre-Close Planning:

    When planning does not start before close, an integration starts more slowly and takes longer.

    Problems

    • Integration starts off slow
    • Early wins not achieved
    • Integration teams veer off on tangents
    • Energy is spent on extinguishing one fire after the next
    • Acquirer loses credibility
    • No formal integration oversight authority established
    • Limited or no risk assessments
    • Weak due diligence
    • Unclear objectives
    • Disorganized Day 1

    How to Avoid

    Prior to close:

    • Establish Integration Management Office (IMO) (at least 60 days before close)
    • Hold IMO kickoff meeting to level set integration teams with the same information
    • Create integration team charters
    • Perform integration risk assessments
    • Begin detail planning for Day 1 thru Day 90
  2. Unclear Integration Strategy:

    Acquirers should define a clear integration strategy early and before their teams begin to develop plans.

    Problems

    • Integration efforts incongruent with deal thesis
    • Integration takes longer than expected
    • Lack of clarity frustrates integration team members
    • Synergy targets are missed
    • Operating model in flux or undefined
    • Internal disagreements about priorities and direction of integration
    • Integration goals unclear
    • No end state defined for integration

    How to Avoid

    • Identify non-negotiables
    • Determine extent of the integration
    • Define “integration complete”
    • Agree on success metrics
    • Communicate top integration priorities
  3. Poor Prioritization:

    Without effective prioritization, high-payback activities receive too little attention.

    Problems

    • “Low-value” work absorbs too much attention
    • Synergies not pursued aggressively
    • Tremendous effort expended to make little progress
    • Integration teams lose faith in the deal
    • Integration workload overwhelming
    • Repeated requests for direction from functional leads
    • Senior management anxious about slow progress of integration
    • Synergy targets carry no more importance than other goals

    How to Avoid

    • Communicate integration objectives including synergy targets
    • Create integration prioritization framework for use by functional leads
    • Allocate adequate resources to the “must haves”
    • Assign major synergies to initiatives and treat those initiatives as priorities
    • Focus IMO’s reporting on high-priority milestones
  4. Disengaged Leadership:

    The Steering Committee and Integration Management Office should make sure integration work is prioritized and issues are resolved quickly.

    Problems

    • Functional integration teams work in silos
    • Integration work is deemed unimportant
    • Integration problems requiring senior-level input go unresolved
    • Employees question whether leadership cares about the success of the deal
    • IMO requests and deadlines ignored
    • Confusion over who “owns” the integration work
    • No sense of urgency among integration leads

    How to Avoid

    • Hold Steering Committee integration meetings twice a month facilitated by IMO leader
    • Establish IMO as a transparent extension of Steering Committee
    • Empower IMO to hold teams accountable and oversee their work
    • Lock in regular weekly IMO meetings on functional team leads’ schedules to maintain momentum and focus
    • Define process to escalate major cross-functional disputes and issues to Steering Committee for quick resolution
  5. Inadequate Communication Planning:

    Communication is usually the worst managed aspect of integrations. People are often left out of the loop or receive mixed messages.

    Problems

    • Uncertainty harms employee morale and productivity
    • Rumor mill runs wild
    • Leadership perceived to be uncaring and out of touch
    • “A” players jump ship
    • Communications reactive, not proactive
    • Little prework to determine high-priority communication needs
    • Information sharing on an “as needed basis”
    • No process established for answering questions

    How to Avoid

    • Craft key messages for each key stakeholder audience
    • Create communication plan matrix prior to close for Day 1 thru Day 90
    • Script early communications so managers do not improvise, unintentionally fuel speculation and create unnecessary angst
    • Communicate frequently through multiple channels
    • Create “rolling FAQ log,” update weekly, and share with employees


Slide titles:


# 1: Little or No Pre-Close Planning
# 1: Little or No Pre-Close Planning
# 2: Unclear Integration Strategy
# 2: Unclear Integration Strategy
# 3: Poor Prioritization
# 3: Poor Prioritization
# 4: Disengaged Leadership
# 4: Disengaged Leadership
# 5: Inadequate Communication Planning
# 5: Inadequate Communication Planning
# 6: Weak Synergy Program Management
# 6: Weak Synergy Program Management
# 7: Underestimation of Resource Needs
# 7: Underestimation of Resource Needs
# 8: Slow Organizational Planning
# 8: Slow Organizational Planning
# 9: No End-State Transition Process
# 9: No End-State Transition Process
# 10: Undocumented Lessons Learned
# 10: Undocumented Lessons Learned
Pritchett, LP Consulting
Pritchett, LP Consulting