What Every Acquirer Should Know about Post-Merger Integration


Why should acquirers follow a well-defined process for post-merger integration?

When integration teams follow the same steps in the same sequence, use common tools, operate under a common framework, they accomplish more and with less effort.


What is the single best predictor of M&A integration success?

The length of the integration. Disappointing deals are highly correlated with slow consolidation. Acquirers should combat the natural tendency to study the situation and try to craft a perfect integration plan. There are no perfect solutions in the game of mergers. Only good and timely ones. The conservative, slow, methodical approach typically doesn’t cut it in a merger integration. That can be the most reckless strategy of all.

From Burn up the Road.


What is the most consequential meeting in an M&A integration?

It is IMO kickoff meeting attended by the steering committee, IMO core team members, and functional team leaders. This meeting is crucial because it lays the groundwork for everything that follows. The subjects covered should include integration strategy, objectives, governance, non-negotiables, priorities, and timelines. The session is very empowering to functional team leaders because they are given the direction they need to begin to develop their detailed plans.

From Step 3: Conduct Joint Integration Management Office (IMO) Meeting.


What is usually the worst managed aspect of integrations?

Communications. It is commonplace for an acquirer to assume that it has done a satisfactory job of communicating to people who’s in charge, who reports to whom, and what’s expected of everyone. But people constantly complain about confusing lines of authority and an ill-defined power structure. Employees feel they are operating in too much of a fog. The situation breeds frustration and tangled relationships, with the result being a blow to employee motivation.


What is the usual length of an M&A integration?

Given every deal is different, there is no typical length. However, if adequate time has been spent planning before close, if the integration is properly resourced, and if the company has its handle on IT integration so it does not slow momentum, then the apex of integration efforts is usually not later than 120 days after close. At that point, the level of integration activity begins to declines. Keep in mind, the 120 days is an average and there is wide variability around it. And different functional teams (IT, HR, Finance etc.) will probably finish their integration work at different times.


Why are early wins critical to M&A success?

Management should identify some easy ways to capture successes. Early wins build confidence in the deal. They give people a sense of accomplishment and build momentum. Critics will point to any lack of progress as evidence the deal is a bad one. Wins help offset their skepticism.


Why should staffing decisions be made early? 

Sometimes, top management in the acquiring firm decides it is best to allow some time for them to get to know the abilities and potentials of the management team in the target organization. But that assumes that those people will hang around long enough for such a familiarization process to occur. Often, they do not. Furthermore, while taking the slow route, a part of this getting-acquainted exercise may consist of seeing bad management decisions being made, mistakes that could have been prevented. Likewise, key opportunities may be lost. All in all, this can prove to be an expensive and time-consuming education process. This approach also drags out the integration of the two firms. It forestalls needed resolution and leaves questions unanswered, prolonging the anxiety and ambiguity, thus contributing to the chronic problem of post-merger drift.

The situation feels like benign neglect to people in the acquisition, as if they are being left to dangle helplessly in the wind. In their opinion, it would be better to get closure, to be appraised promptly and fairly, so that they can get on with their careers either secure in the merged firm or somewhere else.


What are the most common complaint from employees during an integration?

That the integration is moving too slowly. Instinctively, the employees seem to know what’s best. Certainly, they know what they want, and that is for top management to get the merger over and done with instead of letting it drag on and on. Fast people can live with, but across the board, people hate slow.

From The Most Common Complaint During M&A Integration.