Frequently Asked Questions
What are successful M&A integration best practices?
- Establish clear objectives, scope, and timeline.
- Assign synergies to initiatives and owners.
- Align individual performance incentives/bonus programs with integration goals.
- Assign resources with strong project management skills to key areas.
- Implement a disciplined program management process to monitor progress against the key milestones, raise and resolve issues, address risks quickly. and efficiently, and make cross-functional decisions rapidly.
Why are fast integrations more likely to succeed?
One hundred days is the outer limit of shareholder patience, employee enthusiasm, and customer tolerance. You need to make major progress in the first 3 months post-close. The longer an integration goes, the harder it is for people to remain upbeat about the prospects of a merging company. Failure is highly correlated with delays and prolonged transitions.
Why is project management during M&A integrations so important?
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. There are so many pressure points, conflicting views, and management distractions. Unless you employ a carefully orchestrated project management approach, it is almost impossible to get through the integration without damaging the potential of the deal. Treating the transition period like a special project helps management adhere to the schedule, balance resources, focus on priorities, and manage risk effectively.
What are examples of guiding principles?
- Follow a balanced, robust “due diligence” process that examines both financial and operational issues
- Start integration planning during due diligence
- Be ready to roll on Day One
- Translate M&A value drivers into metrics
- Involve HR and IT early in the process
- Communicate decisions about structure, layoffs, and integration objectives as soon as possible
- Provide frequent, candid and regular communications during all stages of the integration to all employees
- Use a defined integration method (processes, tools, and templates)
- Establish strong program management and governance
- Facilitate knowledge capture and cross-functional information sharing
- Document results and conduct a lessons learned debrief
What are integration guiding principles?
Guiding principles serve a basis for decision making during the integration. They are directional advice that help ensure teams act in alignment.
What should be the priorities during a post-merger integration?
Concentrate on things that:
- Shorten the transition period
- Stabilize the organization rapidly
- Strengthen the talent level in the organization
- Reposition the organization to better serve the defined marketplace
- Protect the bottom line
Activities that don’t directly contribute to these objectives are likely to be off target and a poor investment of time and energy.
From The 5 Guidelines for Setting M&A Priorities.
What areas deserve special attention during an integration?
The most vulnerable areas are sales, service, and information systems—that is, the key contact points with the customer and the infrastructure that supports them. Many organizations experience a drop in sales and increased complaints about customer service shortly after a merger. It’s something merging organizations can ill afford to let happen. Special attention is needed to protect sales and maintain service standards. The situation calls for new initiatives—high-powered programs that catch people’s attention and produce results. This might include short-term sales incentives or merger training and information for customer service personnel at help desks and call centers. Another possibility might be special advertising aimed at communicating to customers the newly merged organizations’ commitment to service. Whatever the particular prescription, actions to boost sales and service must be deliberately planned and quickly executed.
From 10 Guidelines for a Successful M&A Integration.
What are the rules to follow when integrating small well-run companies?
- Turn off "integration autopilot"
The same tactics should not be blindly applied to all deals, no matter their size.
- Don't "wing it"
A light touch integration strategy does not mean no touch. Processes always should be implemented, even on little deals, to define goals and time frames, track progress, and hold people accountable.
- Watch the us-to-them ratio
In initial integration meetings, don’t send an army of their specialists to meet with just a handful of managers from the other side of the deal.
- Concentrate on the most pivotal goals
A sustained focus on top priorities provides the best chance to achieve major targets on time, on budget, without burning people out.
- Eliminate demands for "didley" data
Don't ask an acquired business, especially one with very limited resources, to collect trivial facts and figures.
- Cut people some slack
Reduce the bureaucracy shock in the acquired company by giving new employees the latitude to bend a few rules that are unimportant.
- Don’t stick founders in ceremonial roles
Allowing any employee, including former business owners, to collect a paycheck and contribute nothing sets a bad precedent.
- Reduce the number of marathon meetings
Generally, people in small organizations are less accustomed to meetings that drag on for hours.
- Don't jump to conclusions based on job titles
Executives in small organizations often perform a wider, more diverse range of duties. Learn who actually does what before making staffing changes.
- Be realistic about converting mavericks into company men
Entrepreneurs tend to rely on their intuition, improvise, and take major risks. Sometimes, trying to make them work in a highly structured, disciplined way, is like trying to change their DNA. Good luck with that!
What are key questions to ask during a post-merger integration audit?
- How were the events, decisions, communications, and actions surrounding the merger handled?
- What could have been done differently to make the integration easier?
- What remains unfinished?
- How have shareholders, customers, and employees perceived the merger?
- If the company were to merge/acquire again, what should be done differently?