Acquisition Integration Best Practices
During the early months of merger integration, about the best you can do is manage the blur—ride the waves, so to speak, instead of trying to be boss of the ocean. You can’t avoid the rough water, so you might as well make the most of it. The ride may be wild and scary, but you sure can cover some miles.
Believe it or not, there is a blessing in all this. Several in fact. With things in such a state of flux, you have a window of opportunity during which you can do dramatic things. It’s like having a license to make wholesale changes, to take actions that are long overdue.
People are primed for it. The energy level is up. So pull the trigger. Don’t squander this chance to do more than merely merge.
This major uptick in corporate metabolism is something you desperately need to sustain. Rather than being disturbed about it, you should nurture it. The organization needs it to compete. And as for the intense instability, you should use it to develop a higher tolerance for disorder on the part …
Acquiring and merging an organization represents uncommon growth. The situation calls for uncommon management, bold strokes, a rejection of status quo management. There are a number of phrases we frequently hear when companies describe to us the acquisition integration approach they are contemplating.
“We think we should move slowly ... we’re going to get it right the first time ... we don’t want to make any mistakes ... we don’t believe in knee-jerk decisions ... it’s important that we minimize the change.”
Well, these are the wrong words. These ideas don’t work. They reflect a conservative mentality that is highly inappropriate for transition management.
You’ve got to understand that when word of a merger leaks out or is formally announced, you’ve already lit the fuse on this thing called change. Problems are off and running. Top management …
Let’s start with number 10 and count down.
10. Don’t jump in front of a bullet. A lot of hours, energy, and effort have probably gone into making your merger happen. Going forward, chances are good you won’t be able to reverse any of senior management’s decisions. Therefore, think twice before you voice any emotionally-charged negative opinions. Bad mouthing the merger holds little promise of changing anything and it can be harmful to your career ...
Employees need answers. They want closure. What they can’t stand is “not knowing,” and having to continue working in an atmosphere of uncertainty and destabilization.
A lengthy, slowly paced integration is a high-risk strategy. Such an approach exposes the organization for a longer period to the damage that can be done by generic organizational problems brought on by a merger.
It’s worth noting that approximately seven out of ten mergers are either disappointments or outright failures. And the average merger transition spans about twenty-four months, usually twice the time that should be allotted.
We feel one of the key predictors of a merger’s success or failure is the number of months it takes to move from start to finish i.e., the length of the transition period. If there is to be a true merger, an actual consolidation of organizations, …
… we find that costly decisions are often made in management's attempt to generate goodwill. Companies are inclined to overspend in their attempts to buy loyalty, or to reduce feelings of guilt that stem from unpopular actions. It's much like overspending at Christmas—one or two gifts can communicate the thought, and additional presents don't necessarily provide added value.
Your employees will be just as concerned by what they perceive to be irresponsible spending during the merger as they are by harsh belt-tightening measures. They want the company to be fiscally responsible, not foolishly generous. They realize that their future is tied to the financial health of the new organization.
Implement an overall program management process to:
- Monitor progress against the key milestones
- Raise and resolve issues and address risks quickly and efficiently
- Make cross-functional decisions rapidly in regular steering team or executive team reviews …
Disorganization gets dangerous during an integration. Let’s face it; merging is confusing enough even when good project management practices are in place. Without that kind of discipline, the situation can all too easily spin out of control. This is a highly charged political climate where people operate with very different, personalized agendas.
What sort of push-back is predictable in an M&A integration? How much resistance is “reasonable”?
If you have a reliable frame of reference, you can put things into perspective. Knowing what’s “normal,” you’ll have a better feel for how you should react to the particular situation facing you. So let’s look at the typical scenario.
We’re dealing in generalities here, but the breakout usually goes about like this.
Some 20 percent of the people in the acquired company are “merger-friendly.” They’re clear advocates who willingly embrace the combination. You can depend on them to help drive the program. Another 50 percent of the folks sit on the fence. They assume a so-called neutral position, trying to figure out which way to lean. They’re not necessarily hostile to the merger, but they’re not helping like they should. The remaining 30 percent are the resisters. They’re …
1. EXPLAIN THE REASONS FOR THE CHANGE.
Usually the best steps in dealing with problems are the preventive ones.
Perhaps the most effective way to minimize resistance is to make sure people in the organization have a good understanding of the rationale for the changes. The people in charge should be very open, very willing to share their perspectives or the line of reasoning that led to the changes. When this sort of information is communicated, the odds ...
Opposition surfaces as soon as the integration process gets underway. Resistance starts to climb. You push to change the organization, and it starts pushing back. People gripe, whine and criticize, complaining about your objectives as well as the way in which you’re trying to reach them. Pretty soon the noise level begins to hurt your ears.
Under ordinary circumstances, negative reactions this strong mean you’re doing something wrong. In the merger scenario, though, they more likely mean you’re doing things dead right.
Still, resistance gets your attention. And the stronger the reaction of the anti-change crowd, the more you’re inclined to question your goals or methodologies. Challenged by others, you begin to challenge yourself. Whispers of doubt start circulating in your head. Part of you says, “Don’t push so hard …
… The yield point is like the sound barrier—it’s turbulent just before you reach it, but smooth as silk once it’s broken.
Ordinarily managers find it very difficult, particularly during the early stages of an integration, to establish priorities correctly and stay focused on them.
You’re particularly vulnerable to this problem if you start out with a poorly conceived or misdirected integration strategy. Rest assured, there will be more than enough “impromptu management” and improvising called for even when your integration plans are carefully made.
Another major cause of misplaced priorities comes in letting yourself respond to the last pressure point. Obviously, there will be many things pulling at you, vying for your time and attention as well as company resources. Everybody has his or her own private agenda...each employee wants a part of you. Problems seem to pop up everywhere, making a fresh set of demands on a manager’s time. It’s easy to get “scattered.” Don’t make the mistake of giving your time and attention to the person or problem that makes the most noise—volume is a very unreliable predictor of true priorities. You can easily slip into a firefighting mode, where you burn up precious energy …
Announcement of Acquisition to Customers, Employees, and Vendors
Today marks a historic and exciting milestone for all of us: the transaction to combine the Acquirer and Acquired Co. is complete. Together, we will form a stronger business, drive further growth and innovation, and create more value for our employees, customers and stakeholders.
Acquirer and Acquired Co. have been on parallel tracks to modernize our industry with revolutionary products. Our future is not very different from what we aimed for as separate businesses, but now we can move forward with more confidence because we are together.
Our combination enhances virtually every element of our business to deliver quality products and services to customers, and optimize investments and costs for strong financial returns and profitable growth ...
TO: Acquired Co. and Acquirer Employees
Today, we have completed the acquisition of Acquired Co. We have the unique opportunity to build upon our complementary portfolio, strong businesses, recognized brands and quality products to become one of the leading companies in our industry. To our newest employees, let me be the first to welcome you to Acquirer.
This acquisition is a game-changer for all of us. We are now a $5.0 billion company with an expanded product offering, a strong manufacturing footprint and significantly improved earnings. All of this makes for a better, stronger Acquirer – which in turn creates a stronger global Acquirer enterprise with the resources and strategic focus to continue investing in our growing business ...
Today, we announce exciting news: Company A has completed its acquisition of (merger with) Company B. This is an important day for our organization and one that ensures we remain a highly competitive global company.
We plan to quickly integrate the company and finalize the corporate organization structure within the next 90 days. The success of our integration effort will be driven by how effectively our employees work together to deliver value to our customers and results to our bottom line.
Company leaders will be visiting the new operations over the next few days to talk with employees about what this transaction means and what they can expect going forward.
Examples of communications to customers from three different acquirers and deals.
Excerpt from first example:
T4 has recently announced its agreement to purchase OCN to become one of the foremost business service providers in North America. This provides our customers the opportunity to access an enhanced service portfolio over a larger geographic area. T4 is and will remain committed to supporting our customers’ mission critical requirements ...
Excerpt from Announcement Letter to Customers
We have announced exciting news: Acquirer and Acquired Co. have completed the transaction to merge our operations.
This is a game-changing combination which will provide us with the scale, geographic reach, and capabilities to solidify our position as a leading provider of materials in our industry. Going forward, you will receive even more value from our products:
- We will have a greater portfolio of quality products and a family of brands as well as increased capabilities to innovate superior products and systems
- We will tap into Acquired Co.’s industry-leading technology and R&D and achieve more innovations in manufacturing technology, products, and systems.
- We will have greater reach and capacity to meet customer requirements ...
Today, we announce exciting news: Company A has completed its acquisition of Company B. This combination creates an organization even better able to serve customers and compete in the global marketplace.
Our new name is Company AB and our company's website is now CompanyAB.com. The name change symbolizes our intention to broader our business platform and deliver more value to our customers.
We know our success is dependent on your success, and we are excited about what the new Company AB has to offer:
Acquisition Announcement to Suppliers
Answers to Supplier FAQs
Excerpt from Supplier FAQs
- What is the purpose for Global Procurement?
To provide the largest volume opportunity for our supplier business partners. We believe that with larger volumes the supply base’s manufacturing cost will be lower, thereby reducing our cost.
- What are the short and long-term implications?
Short Term - We will be focused on reducing our supply base to maximize the volume for selected suppliers. Longer Term - We will work to integrate more with our smaller supply base, and to learn how to combine our resources with those of our suppliers. This will include logistics ...
Dear Valued Supplier,
Today, we announce exciting news: Company A has completed its acquisition of (merger with) Company B. This combination creates an organization even better able to serve customers and compete in the global marketplace.
Our new name is Company AB and our company's website is now CompanyAB.com. The name change symbolizes our intention to broaden our business platform and deliver more value to our customers.
We are excited about what the new Company AB has to offer: . . .
M&A: Employee Questions and Answers
The deal will create numerous questions in the minds of stakeholders. By anticipating their concerns in advance, you’ll be better prepared to address them. We have compiled lists from our M&A integration consulting projects of the most common questions asked by:
Common Employee Questions
We refer to the first ten questions on the list as “me issues” because they are focused on the most common personal concerns of employees. Until these “me issues” are resolved, people are …
Answers to 43 common frequently asked questions by employees on the front-end of an acquisition.
- Will offices or other facilities be closed?
For the time being there will be no changes and we will continue to go to market as we have in the past. We will begin immediately to get to know each other and develop plans to combine our businesses in the most effective way ...
Excerpt from Answers to Employees FAQs
- Is the purchase/sale of Acquiree to Acquirer finalized?
Yes. The U.S. Department of Justice (DOJ) and Acquirer have entered into an agreement which permitted the acquisition to proceed. The Acquirer and Acquiree have both received Board and Shareholder approval and we have officially closed the deal.
- What Acquiree offices are included in the sale?
All Acquiree’s operations in North America, Europe, and Asia are included in the deal.
- Do you anticipate closing any Acquiree or Acquirer Company facilities? Do you anticipate job losses due to the merger?
We have formed global integration teams that include members from both Acquirer and Acquiree. They will look at where functions, resources, and processes can be combined in order to reduce cost, better serve our customers, and ...
Upon announcement, let employees clearly know:
- The reasons behind the combination
- Specifics of the agreement
- What the company and its people will gain or lose
- How the company will proceed with integration and change
- General facts about the partners–size, products, history, key executives, and locations
- How business should be conducted during the transition period
- Immediate implications for job security
- What to say to customers and clients
- Changes in policy or procedures
If known, information can also be communicated regarding: …
Talking Points for Executives at Employee Meetings
Answers to Employee FAQs
Excerpt from Talking Points for Executives at Employee Meetings
- Welcome everyone! It’s a pleasure to meet with you today. We’ve invited you here to celebrate the announcement of our acquisition by a highly regarded, successful private equity firm,____________.
- Our acquirer provides management and oversight for the multiple businesses in their portfolio, which will soon include our company.
- I’d like to remind you that the deal has only been announced. It has not closed. We anticipate closing the deal by year-end, but it’s not final yet. We’ll let you know as soon as the contract is signed.
- We’re keeping our company name and brand. Our sterling reputation for quality products and excellent service will help us retain existing customers and acquire new ones.
Critical communication meetings with employees occur:
1. Announcement Day
2. Close Day
3. After Close–Benefits Briefing
These meetings are prime opportunities to inform people, engage them in the transition process, and answer any questions they may have. Therefore, these sessions should be planned carefully.
When it comes to sharing information with employees, it’s a “pay now or pay later” proposition. Time invested up front in communications is time wisely spent. Without adequate information, people will cook up all sorts of wild rumors that create unnecessary stress.
It’s important to remember that mergers and acquisitions are not democratic processes …
Most IT processes and procedures will remain unchanged on Day 1. Acquired Co. and Acquirer’s IT teams will be working closely together over the next several months to bring our IT systems together in the way that best suits the needs of the business. In the meantime, review the FAQs below to learn more about the IT transition and what it means for you. For even more information, check out the FAQ on Integration Central at http://www.ourcompany.com/integration ...
M&A Day 1
So the deal closes. It’s “Day 1.” Are you ready for one of management’s big moments?
First impressions tend to be lasting impressions, and this highlights the importance of opening moves. Your initial actions make a defining statement about the forthcoming integration process and management intent. Up until this point, people will have been carefully listening to what management has said about the deal, but they believe what they see. Talk is cheap . . . the reality lies in what actually begins to happen before people’s eyes.
So how can you seize the moment and use this pivotal opportunity for maximum effect? Follow these seven guidelines and your opening moves will serve as a launch pad for successful integration …
How you begin the integration process carries heavy influence over how you will finish.
- Day 1 Mandatories Summary
- Day One Mandatories
- IT Day 1 Status
- East Operations
- West Operations
- Real Estate
Today, marks the beginning of our new organization. This Day 1 Onboarding Guide is designed to help you understand changes that are taking place (or will take place) and any actions you may need to take.
The purpose of this guide is to explain:
- What you need to know now (Now: this week)
- What you'll need to know and do in the very near future
- When other changes will take place and when you can expect to hear more about them
You will continue to do your job the same way you did before close. As we continue to integrate our organizations, we will inform you of changes, and if your assistance is needed. This guide covers company-wide information. Your manager will cover information specific to your function.
- Impact on Your Job
- Our Commitment to You …
- Transition Road Map
- Transition Events Schedule
- Important Compensation and Benefit Reminders
- Acquirer Compensation Adjustments
- Compensation - Exempt Employees
- Compensation - Office Hourly Employees
- Compensation - Field Hourly Employees
- Acquired Co. Services Benefit Offerings
- Benefits Overview
- For More Information
Acquiree's Pre-Merger Compensation and Benefits Plan and the Acquirer's Post-Merger Changes in 40 Areas:
- Salary Plans
- Incentive Plans (Cash)
- Restricted Stock
- Exempt Overtime
- Overtime Meals
- Call-Out Pay
- Shift Differential
- Cafeteria Plan ...
- Communication of New Benefits Plan
- Talking Points
- Timeline for Communicating Benefits Program
Why Acquired Co.
Market Strength / The People
Acquired Co. Overview
Strategy for The Future North America
Opportunities for Employees
What Has Been Determined Thus Far
What to Avoid in Employee Orientations
- A tedious data dump
- Boring presenters
- Executives who do “touch-n-go’s” or “flyovers” without any real engagement
- Dumbed-down orientations for employees (separate from managers) …
- Employee Directory: All Acquired Co. employees will be added to Acquirer Employee Directory
- New intranet site for Acquired Co. employees will be accessible
- Day 1 Email, Phones, Applications, …
- Incoming call & ticket support will stay “as is” on Day 1.
- Both Help Desk teams know who to contact if users request access to resources. Acquirer’s
- Intranet site will have a “cube” with the Acquired Co. support phone number and when clicked, will email the Acquired Co. Help Desk …
Acquisition Integration Post-Day 1
Every merger, once announced, is immediately put on trial. Top management—those who crafted the deal—also stand accused. And the accusers just keep crawling out of the woodwork as several months go by.
Often word of the merger leaks out during the negotiation stage, and the criticism cranks up before the deal is done, even before, top management gets to tell its story. This is a crucial opportunity, but far too often executives blow their chances at properly setting the stage for what’s to come. They also say things that are guaranteed to come back to haunt them. Besides all that, however, talk is cheap. Top officials can carry on all day about how great the merger is going to be. They can praise its potential, and promise people the moon. But there are many disbelievers.
The press hovers close by, hoping to report something provocative and controversial. They like …
Workstreams include Information Technology, Corporate Finance, Communications, Human Resources, Environmental, Safety, R&D, Procurement, and Business Units
- Develop high-level working assumptions on scope if Acquired Co. moves to SAP
- Prepare rough order of magnitude cost estimate
- Create Functionality Matrix showing all ERP instances and what modules and functionality are used
- Determine initial working assumptions on ERP rollout options
- Complete organization design
- Determine standard desktop and laptop models
- Determine patch management, asset management, and software deployment tools ...
- Merger Integration Report Card – 1st 60 Days
- Survey – Concerns Raised
- Next 60 Days: Integration Challenges
- Recommendations from Managers
- Executive Dilemmas
- The Tough Questions
- Recommendations for Next 90 Days
- Next Steps
Reductions Guiding Principles
Q: Will my benefits change (insurance, 401k, etc.)?
A: Employees currently enrolled in the target Company benefits plans will continue their coverage under the current provisions of their benefits package. Once your job is transitioned to New York you will receive information on COBRA that will allow you to continue their benefits for up to 18 months.
Q: Do I need to start answering the phone as an Acquirer employee?
A: No, you will continue with conducting business as usual and answering the phone as Target Company.
Q: Will I be reporting to someone from Acquirer ...
Status of Integration Initiatives
First 90 Day - Initiatives Status Summary
- All Team Leads were interviewed; answers were aggregated and kept anonymous
- Output was organized by topic into recap slides for each question
- Questions were centered on broader “Newco” topics …
First Page of 3-Page Merger Integration Update
It’s now been three months since we combined our companies. I’d like to explain what integration challenges lie ahead and how you can continue to help.
First, I thank you all for your cooperation and hard work. Integrating two companies is tough and I recognize that many of you have put in a lot of additional effort to help the two companies begin operating as one. I thank everyone for their patience. During a transition there are always more questions than answers, and I appreciate your ability to stay focused and productive in spite of the inevitable ambiguity and uncertainty that mergers always bring.
We still have a way to go. I’m aware of the differences in the management styles of the two companies and am committed to improving our cultural integration effort. I’m also aware of our failure to communicate as often as people would like. I hope this update is a demonstration of my commitment to improve in that area as well ...
What Our Company Needs from You
- Continue to be patient and understanding as we push through some of the tough integration challenges related to the core parts of our business.
- When you need more clarity or direction, ask your manager or supervisor. Don’t let ambiguity paralyze you or make you complacent.
- Put our customers and the business first. Don’t get distracted by what you may believe serves our internal organization at the expense of what our customers need.
- Get to know your new work colleagues. Take the initiative to reach out and introduce yourself. If you’re not sure who they are, work with your manager or supervisor to find out.
- Be tolerant of cultural differences. Just because a particular approach worked well in the past …
- Plan for mid-transition hires
- Communicating changes to salary grade and/or pay adjustments
- Exec Comp: SC compensation changes in System
- All pay changes effective April in System
The HP-Compaq merger did spend a lot of time and money evaluating the impact on customers before executing their post-merger IT integration plan. Between the announcement and close of their deal, they held focus groups and conducted surveys to assess what customers were worried about and how they hoped the combination would benefit them. Then, integration plans were designed to meet clients’ needs. And where changes had to be made that were not immediately in the best interest of customers, communications plans were executed to explain why these decisions were made.
HP-Compaq also used a M&A integration approach called “Adopt and Go” for making decisions regarding internal processes and IT systems. Rather than debating for months about whose processes were best, they simply agreed on one and went with it. As a result, they moved their merger forward quickly. Speed is very important. Like employees, customers have "me issues" too. And, they have expectations regarding how soon their "me issues" should get resolved …
About 100 days after Close, it’s a good idea to take the temperature of the two companies’ customers. Chances are they may have experienced some turbulence caused by the transition. They’ll probably appreciate a little special attention at this point, so it certainly can’t hurt to touch base and find out if they’re experiencing any problems that you might not otherwise be aware of.
It may be uncomfortable to go looking for bad news, but it’s even worse if customers have a problem with your business and don’t tell you about it. It’s up to the seller to keep the lines of communication open. A survey is one way to promote a dialogue with customers and give them an opportunity to tell you how well the combined organization is meeting their needs …
Corporate culture often catches the blame when the post-merger integration process runs into trouble. But mergers produce an array of organizational problems that have nothing to do with culture conflict per se.
Imagine, for instance, that your integration program is snarled up because of power struggles, turf battles, communication tangles, lack of teamwork, and such. Does that signal cultural incompatibility? Not necessarily ...
Status of Integration Guiding Principles
Live our values — no compromise
People think that overall the leadership teams are exhibiting values
Work together — no “us and them”
Still "pockets" of dominant Target and Acquirer groups
Act with urgency — make decisions quickly
Still major concerns around the day-to-day decisions are too slow…
- Communications for April/May
- Termination Impact Matrix
- Business Rationale for Termination Actions
- WARN Act (Worker Adjustment & Retraining Notification Act) – Fresno only
- Previous Severance Packages
- Current Severance Packages
- Termination/Survivor Meetings by Site
- Email Invitations to Meetings
- Support Materials for Conducting Termination/Survivor Meetings
- Separation Package Contents
- Site Meetings to Follow Earnings Call
- Script for Conducting “Keepers” Meeting
Business Rationale for Termination Actions
- During a recent two-day meeting, our Executive Team reviewed our customers, competitors, product portfolio, market opportunities, sales forecasts, and costs.
- In general, our business is in good shape and growing, despite some very difficult market conditions. We continue to be a market leader. We are convinced that the merger has helped us maintain this leadership position in our highly competitive market. However, to remain in alignment with our forecasts for the year, it is imperative that we cut operating costs by April 30th.
- To determine where to make these cuts, we reprioritized our list of projects/programs and then assessed the resources assigned to each. We also assessed the support resources required to run the business. As a result of this analysis, we were able to identify reductions that could be taken without significantly impacting our highest priority projects/programs.
- The reductions will be limited to three sites: Fresno, Oakland, and Norfolk.
- While we regret the negative impact this decision will have on some individuals and teams, we are convinced it is the right decision for the business.
- The reductions being taken on Friday, April 26 th are the only ones planned at this time, but we will continuously re-evaluate our business and may make additional adjustments in the future, if required ...
A direct by-product of the acquisition integration process is an increase in employee turnover. It’s a fact of life that, whether planned or not, there will be attrition.
Most of the time merging companies can survive operating with fewer people, but not fewer quality people. So, you can’t just sit back and let nature take its course so far as turnover is concerned.
Natural attrition during a merger produces a loss of good employees and minimal turnover among marginal, weak players. The reason for this is obvious—it’s easy for good people to find new jobs, but much more difficult for the lesser talents to reposition themselves successfully elsewhere.
In most cases it’s advantageous to consolidate and downsize. The financial logic driving the merger probably is based on the assumption that certain economies can be achieved through …
IT Integration Standardization Phase IT phases,
IT Integration Process Enablement Phase
Progress - Task Group
IT Integration Phases
IT Integration Punch List
Finance and Accounting
- Analysis and Initial Plans
- Design New Organizational Plans
- Implementation Planning
- All Steps by Month
After the Merger: Managing the Shockwaves, 3rd Edition
Author: Price Pritchett, Ph.D.
Named “one of the best business books of the year” by Library Journal.
After the Merger provides a clear look at the tasks and problems of post-merger integration. It is first book ever written on merger integration strategy.
This hardbound volume provides a level of detail that will help your team navigate the many potential pitfalls of the integration process. After the Merger is packed with proven strategies that allow you to turn the instability created by a merger or acquisition to your advantage.
Specific topics explored include:
- 6 errors that managers make again and again—and how you can avoid them
- Best practices for handling the 4 major categories of a merger—everything from “rescue” to “raid”
- Ways to defuse cultural time bombs that can destroy mergers
- Separate checklists for managers in both the acquiring and target companies
- Time-saving checklists for executives on both sides
- Importance of conducting a disciplined Merger Talent Audit
Acquisition Integration Playbooks: Day 1 - Day 180
Acquistion Integration Tools
M&A realization best practice tips
- Assign synergies to accountable owners and then hold them to a plan
- Follow up on agreements on planned measurement approaches and their timing
- Ensure initiatives are supported and linked to integration related projects
- Manage cross-functionally to ensure costs are not simply shifted to other parts of the business …
A strategic score is assigned to each of 144 workstream initiatives in a cross-border acquisition integration.
Columns on Excel spreadsheet for each Initiative:
Work Stream, Responsible, Execution by Day 1, Urgency: Hi/Medium/Low, Impact: Hi/Medium/Low, Strategic Score, Ranking in Original Top 10, End State, Impacted Countries, Project Structure, Led By Accountable, Reporting to IMO
Excel spreadsheet to track synergy estimates categorized as labor and non-labor, required and discretionary (strategic vs. nonstrategic).
M&A Cost Synergies Excel Template plus Example of Completed Template
Instructions for Cost Synergy Template
1) Log each integration activity that increases or decreases headcount and/or expenses with projected time frames.
2) Use "Assumptions and Notes" to describe each integration activity in more detail.
3) Notes regarding general accounting treatment:
- Severance for reductions in Acquiree positions are generally capitalized as part of the purchase price (if the reduction is made within one year).
- Severance for reductions in Acquirer positions are expensed when employees are notified.
- Stay bonuses are expensed over the period teammate is required to work.
- Costs related to Acquiree facilities that will no longer be utilized are generally capitalized as part of the purchase price (if the move is made within one year).
- Costs related to Acquirer facilities are expensed.
- Potential sub-lease income offsets costs recorded ...
The impact on resources required and the timeline should be well understood before a scope change is approved. Each approval should be documented .
Scope creep is a common affliction of integrations. It's where scope changes happen slowly and unofficially, without changing due dates or otherwise making adjustments to the budget.
Dependencies mandate tasks be executed in a specific sequence. They should be rigorously tracked because they can help you:
- Determine the right order of activities in the M&A integration.
- Calculate the critical path of the integration
- Identify resource and scheduling issues
- Identify opportunities to accelerate the schedule
A risk is an event that has not happened while an issue is something that has happened.
As you identify each risk, determine which integration team member will be responsible for tracking and reporting it. The owner of the risk is responsible for implementing a plan to resolve a risk if it becomes an issue.
Prioritize your integration risks based on the likelihood that they will occur and the severity of the problem if they do occur.
We are delighted to inform you that our company is merging with Dodson, Inc., a leader in our industry. There will be minimal disruptions to our business due to the change in ownership. Our leadership team, our headquarters, and our products will remain the same. That means no interruptions in service to you.
Our new owner has the funding to grow our business in a way that will help us realize our full potential and serve you even better in the future ...
Issues are problems, gaps, inconsistencies, or conflicts that occur during the an M&A integration. Issues can include problems with the employees, technology, shortages, or any other problem that has a negative impact. If issues remain unresolved, the integration may suffer delays and overruns. Each issue should be monitored and assigned an owner.
What do you report?
Each team member will provide the following to the M&A Task Force leader: Key Actions/Accomplishments During the Past Week, Key Issues/Decisions Required, Potential Solutions/Help Needed, Next Steps/Actions
How is it reported?
Task Force Leaders compile the individual team member reports into a team report and submit it weekly to the IMO. Alternatively, Task Force Leaders may bring the team's report to a regularly scheduled IMO meeting and review the report with the IMO and other Task Force Leaders ...
- The latest version of the Integration Scorecard/Milestones will be sent to you via email each Monday. This version will reflect all updates reported through 5:00 pm (Central) the previous Friday.
- Send all weekly updates to Bill Smith at email@example.com
- Make your updates directly to the latest version of the Scorecard/Milestones. This allows us to cut and paste. There is no need for you to recreate your milestones elsewhere or retype them each week. Just make the changes you want to make, save the file, and then attach the saved file to an email. Please put your team’s name in the subject line of the email along with the “as of’ date. Example: Engineering Update 12Jun25.
- When you submit your updates, please make sure you’ve reviewed all due dates for your team. If you submit an update with past due milestones, those items will be flagged as yellow indicating that they are overdue ...
Synergy types include Headcount, Operations, Sales Procurement , R&D Cost Savings, Pricing Rationalization, Procurement, and Cross Selling.
Comprehensive synergy tool template in Excel that includes 29 columns to track all dimensions of synergies.
Headings of 29 Columns in Synergy Report Excel Template
- Synergy Initiative #
- Function - Business/Product Line - Sub-function
- Workstream Ref #
- Description of Synergy Opportunity
- Date Original Input
- Date Updated
- Eliminate Redundancy …
Reduce operating costs by $30 million
Reduce SG&A headcount expenses by $150K
Decrease inventory by $150MM
Reduce headcount by 100 FTE
>98% retention of key customers ...
Post-Merger Integration Status Reported by these Departments:
- Corporate Business Development
- Corporate Communications
- Tax Products
- Customer Support
- Human Resources
- Information Technology
- Commercial Applications
- Product Management
- Sales and Alliances
The M&A Synergy Template captures synergy description, timing, assumptions, risks, cost to achieve, optimistic, conservative, and most likely synergy projections plus actual net synergies achieved.
Close Out IMO
How to hand off remaining activities:
- Document deadlines and deliverables associated with the remaining open items
- Provide access to all documentation on the project
- Provide a list of all contacts and stakeholders involved in the project
- Provide a full understanding of what has to be done, by when, and by whom.
- Make sure people have an understanding of the negative implications if the remaining tasks get delayed
Every integration needs to have an end. Managing the End-State Transition can be just as important as managing the rest of the integration.
What is End-State?
The point in the integration when:
- The bulk of planned integration activities have already been accomplished
- The IMO processes can be ramped down and dedicated IMO personnel scaled back or redeployed
- The remaining open integration workstreams and issues can be transitioned to a normal operation’s function