In attempting to realize the true value of a merger, the buyer must coordinate a smooth and efficient merger integration process. Important issues need to be addressed in three areas – people, places, and things.

People

Staffing Level

One of the primary areas that an acquiring company looks to in order to realize the projected return on its investment is the new company’s staffing level. If employee redundancies are eliminated, cost projections are more likely to be met. The hard part is deciding who stays and who goes. Much of this depends on the nature of the acquisition. If the intent is for an acquired firm is to maintain its independence, it might make little sense to reduce staffing levels. However, if the acquired firm is absorbed into the acquirer, staff cutbacks may be appropriate.

Management

The staffing decisions process is normally driven by the acquiring company, but it is a good practice to involve the acquired company so a comprehensive evaluation be made.

Candidates must be evaluated objectively which can be difficult to do because emotions can cloud the judgment of evaluators. For the acquirer, it is much easier to just stick with the team it knows and has worked with for years. But failure to consider acquired company personnel for management positions reduces the chances of success.

Labor

Rank and file employees are protected by labor laws. This may limit the options available when deciding who should stay and who should go. However, it should not prevent the buyer from assessing all employees. By evaluating first and then worrying about possible legal protections, the buyer gains a much better sense of the quality of the workforce.

The same evaluation guidelines apply to both labor and management. The buyer should be objective, balanced, and honest and develop a selection methodology by targeting certain employees for layoff or retention based on performance and experience. The applied criteria should be documented, supported by a performance evaluation, and kept confidential. The process may require the formation of a review committee made up of representatives from each company to ensure that any terminations occur according to agreed upon procedures.

Once the selections are made, they must be examined in light of the ...