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