Answers to FAQs

M&A integration is the consolidation of two organizations to the extent necessary to achieve the anticipated benefits from a merger or acquisition. Often these benefits are efficiencies, cost savings, and/or revenue gains that the two organizations could not have achieved separately.

Step 1: Executives agree upon the integration's objectives, end states, guiding principles, and non-negotiables. The integration plans will draft of the direction set by senior management so there should be early clarifying conversations to identify and sort out any disagreements.

A typical M&A team structure for an integration consists of three different layers: a steering committee, an Integration Management Office (IMO), and a variety of task-force teams. Assuming that the appropriate people (in terms of personality, management ability, technical talent, and time to devote to the process) are assigned to these slots, the group is in a position to do a good job of integration management.

The Integration Management Office (IMO) is the real workhorse responsible for driving the integration forward and keeping good project-management discipline in place. One member of this team should be designated as the integration project leader and given the overall responsibility for the project’s progress. As a whole, this team’s purpose is to provide the guidance and day-to-day decision making that will allow the integration process to move forward on a timely basis. This group also should include members of both organizations. A fairly balanced representation generally fosters better buy-in from the people in the two organizations while also improving the odds that plans for integration can be implemented effectively.

An integration project charter is a document designed to clearly outline the “who, what, and how” elements of an integration and gain commitments from resource owners in advance.

The role of Integration Manager in M&A is a challenging but fascinating job. It calls for a versatile, multiskilled person who possesses executive muscle and strong leadership ability. The role is ambiguous and sketchy at first, so the integration manager must be able to take charge and bring order to an undefined, very fluid situation where a lot is at stake. There are seven key attributes needed for integration management success.

  1. Project Management Skills
  2. Power, Authority, and Executive Credibility
  3. Social Intelligence
  4. Tolerance for Ambiguity and Uncertainty
  5. Sense of Urgency
  6. Strength of Personality
  7. High Energy Level

An integration plans identifies the tasks to achieve the milestones of an integration, and the owners, timing, risks, issues, and dependencies associated with those tasks. A plan should always include these 5 elements:

  1. End States
  2. Governance
  3. Communications
  4. Tasks
  5. Early Wins

A 100-Day Plan includes the steps, their timing, and the necessary resources to achieve the integration objectives for the period ending 100 days after the close of the deal. The development of this plan should begin before close, no later than when the letter of intent is signed.

A playbook is a how to guide for an M&A integration. It clarifies what needs to be done, by whom, and by when. Plus, it defines the integration team processes for governance, reporting, communications, and risk and issue management. Good playbooks bring consistency, predictability, and reliability to the integration process and shorten the learning curve for team members.

A checklist is a list of tasks to ensure integration teams (i.e. HR, Finance, Accounting Information technology, Sales, Marketing) cover their bases and do not miss any key integration activities.

  1. Paying too much
  2. Lack of strategic clarity
  3. Slow decision-making
  4. Lack of buy-in
  5. Culture clash
  6. Loss of key customers
  7. Erosion of business fundamentals
  8. Talent attrition
  9. Under-resourced integrations
  10. Complexity
  1. Don’t Try to Build One Common Culture
  2. Score Early Victories
  3. Communicate Carefully
  4. Re-Recruit your Keepers
  5. Favor the Best
  6. Establish Clear Authority
  7. Take Actions That Are Long Overdue

The trust level often drops dramatically when major changes are made in an acquired company post-sale. Typically, morale heads south. Loyalty, the tie that binds, can come unraveled. The overall effect can be punishing, like a hard fist slammed into the stomach of the organization. And it can knock the wind out of work groups.

There is no typical length. The actual length will depend on the scope and complexity of the integration, the objectives of the acquisition, the operating and cultural differences between the two companies, the time integration team members can dedicate to the integration, their integration experience and expertise, and the required changes to the IT systems.

Acquirers should keep in mind, the longer it takes to integrate, the more likely the integration will fail. Disappointing deals correlate highly with slow consolidation.

A stay bonus is an incentive paid to an employee who remains employed with a company for a certain period of time after the close of an acquisition. These bonuses are usually reserved for employees who have critical skills or possess key information needed during the integration.