Step 5: Develop Post Merger Integration Risk Management Plan

Growth through M&A is a high stakes game. The element of risk adds to the drama, excitement, and overall appeal of the merger game. But as always, where there is much to be gained, there is precipitous downside risk as well. Developing a post-merger integration risk management plan is time well-spent.

Ten of the most common M&A integration risks are:

  1. Vague integration objectives
  2. Weak employee communication
  3. Lack of adherence to an effective M&A integration methodology
  4. Poor prioritization
  5. Slow decision making
  6. Loss of momentum
  7. Late planning
  8. Bad synergy program management
  9. Unclear governance
  10. Mis-management of cultural differences

It is difficult to be over-prepared for an integration. You should plan ahead and anticipate potential problems. In this section, we provide 1) articles, presentations, and videos that reveal M&A integration risks and 2) checklists and tools to help you mitigate and track them.  We also recommend you check out our answers to frequently asked questions about post-merger integration risks.

Articles

Presentations

Checklists

Tools

Videos

Articles

Four Common Approaches

Four Common Approaches to M&A Integration That You Should Avoid

We need a more colorful classification system for how companies go about the merger integration process. You know, a new nomenclature. So I sat down and did some reflection.

Going through my memory bank, I pulled up some of the most common patterns … 
 
Top 10 Distress Signals in M&A Integration

The Top 10 Distress Signals in M&A Integration

Nobody in their right mind expects merger integration to be a trouble-free process. Simply put, combining organizations is a scratchy drill …
The Most Common Complaint During M&A Integration

The Most Common Complaint During M&A Integration

By Price Pritchett

Employees find lots to gripe about when they’re being acquired and merged.  Looking back across my three decades of consulting on M&A, though, one complaint stands out clearly as people’s #1 gripe …
 
The Most Dangerous Phase of M&A Integration

The Most Dangerous Phase of M&A Integration

The journey from “deal announcement” to “integration complete” is a hazardous trip. You expect problems. But the most treacherous terrain often takes executives by surprise ...
 
M&A Failure

M&A Failure Feeds on Itself

The merger is a major distraction for people in the acquired organization. It interferes with their work focus and undermines job commitment. This, plus the destabilization that is simply generic to mergers, causes productivity to take a damaging hit during the transition period ...
M&A Integration Difficulty

Is M&A Integration Harder than Rocket Science?

People often overrate themselves, not in rocket science, but in other areas of their lives more familiar to them ...
Which is Easier Making the Deal or Making the Deal Work?

Which is Easier—Making the Deal or Making the Deal Work?

While you wrestle with that question for a minute, think about how much money is at stake. Then consider the number of people in the two companies ... all the careers that are involved ... the lives you’re playing with here ...
 
5 Post Merger Integration Costs

The Post Merger Integration Costs Due to Bad Management

How can you tell if a merger is being mismanaged? You will see several of these major problems and the costs that accompany them: ...
Post-Merger Sales Integration

Post-Merger Sales Integration: The #1 Hotspot

There’s an old line that says, “If mama ain’t happy, nobody’s happy.” Adapting that notion to the world of M&A, I’d say, “If Sales ain’t happy, nobody’s happy …"
Six of the Most Common Mistakes in Post-Merger Integration Management

Six of the Most Common Mistakes in Post-Merger Integration Management

The following missteps occur even in well-run companies with highly capable executives at the helm:

1. Lack of a clearly defined Integration Manager ...
Why do Mergers & Acquisitions Fail

Why Do Mergers & Acquisitions Fail

How do seemingly good deals go bad? Here are the ten reasons why:

  1. Paying too much. Some companies feel they have to overpay to block a competitive bid or to protect their turf. But when too much is paid, it can kill any chance to achieve a satisfactory return on investment ... 
M&A Problems

M&A Integration Shockwaves

The shockwaves from a merger can badly disrupt day-to-day operations. The tremors start when employees worry about how they’ll be affected by the deal, fret over a myriad of integration problems, and commonly waste time waiting for answers or just being confused about how to proceed with their work. Overall, business suffers ...
A man walks into a bar

Man Walks Into a Bar . . .

By Price Pritchett

A man walks into a bar and says, “Give me a beer before problems start!”  He downs it and orders another, saying, “Give me a beer before problems start!”  The bartender looks confused.  This goes on for a while and after the fifth beer, the bartender—now totally perplexed—asks the man, “When are you going to pay for these beers?”  The man says, “Ah, now the problems start.” ... 
 
Post Merger Integration Challenges

Post Merger Integration Challenges

Even though your deal may look great, you should be aware of some of the common post merger integration challenges you may face. So let’s take a look at what could prove to be very painful if you don’t manage your merger properly ...
Post-Merger Integration Mediocrity Can Rob You Blind

Post-Merger Integration Mediocrity Can Rob You Blind

A flawed integration process can be terribly expensive, yet the costs of the mistakes are seldom measured by acquirers …

Presentations

Post-Merger Integration Issues, Problems, and Challenges

The 10 Common Post-Merger Integration Mistakes that Create Problems, Issues, and Challenges

This Post-Merger Integration presentation is a crash course on M&A integration that condenses into 10 slides PRITCHETT's recommendations on how to avoid post-merger problems.

  1. Little or No Pre-Close Planning:
    When planning does not start before close, an integration starts more slowly and takes longer.
     
  2. Unclear Integration Strategy:
    Acquirers should define a clear integration strategy early and before their teams begin to develop plans ...
Risks, Dependencies and Mitigation Steps by Function

Post Merger Integration Issues, Risks, and Dependencies

Risks

  • Tight timeline, limited information gathering leads to organizational/infrastructure decisions and less than optimal outcomes
  • Inconsistent communications to the stakeholders between the two companies
  • Disruptions in the business due to systems issues
  • Loss of key employees and contractors leading up to and during transition …

Checklists

Sales, Marketing and Operational M&A Checklist

M&A Due Diligence Checklists - Sales, Marketing, and Operations

Comprehensive 95-page sales, marketing, and operation guide to conduct thorough, effective M&A due diligence.

One of the most difficult aspects in business evaluation is understanding and justifying forecasts of future revenues. Section I of this guide provides a micro-style analysis of marketing and sales. The section asks numerous specific questions about twenty-five company functions that, together, address the ability of a business to gain and retain profitable customers.

Sections II through VI help the analyst develop a macro evaluation of the ability of other functions and departments to deliver on marketing’s promises to customers and prospects.

Section VII acts as a strategic summary, where detailed facts gathered earlier can be consolidated into an overall perspective of the company and its relative position in the industry. The summary helps the analyst develop and support conclusions. The additional information gathered during the analysis may lead  to ...
M&A IT Due Diligence Checklist

M&A IT Due Diligence Checklist

Excerpt from IT Checklist

  • Systems for which management is dissatisfied. Corrective measures taken or planned
  • Employees with exceptional skills in writing software, developing systems, or troubleshooting problems
  • Systems manual maintained, up to date, and followed
  • List of all information systems utilizing computers and their function in the business. Type of machines, software, their age, number, and location of units
  • Backup and disaster recovery procedures and programs
  • Level of difficulty anticipated to integrate the company’s databases into the buyer’s systems
  • Policy on the issuance of mobile IT equipment to employees. List of all mobile equipment and to whom it is issued
  • New information systems scheduled to be added or to replace existing systems
  • Systems that use third-party software and custom-built solutions. Third-party systems under maintenance contracts
  • IT employees responsible for system support and security. Security systems and practices are in place to protect the systems ...
HR Due Diligence Information Request Checklist

HR Due Diligence Information Request Checklist

8-Page HR Due Diligence Checklist:

  • Organization charts and a description of management structure, including principal functional areas, headcount by area. and reporting relationships.
     
  • Job descriptions for all major job categories and minimum education, experience, and skill levels required for each.
     
  • Current pay ranges and recent increases. 
     
  • List current personnel (including lists of officers and directors) with hire dates, current annual salaries, bonus targets (if applicable), commission targets (if applicable), years of service with the Company, site location, highest educational degree, and prior experience ... 

Tools

Merger Integration Risk Analysis

Merger Integration Risk Analysis

A penetrating look at key pressure points that impact the integration process.

  1. Amount of expected consolidation or integration
  2. Alignment/compatibility of the two organizations’ business strategies
  3. Extent to which the two organizations have been competitors
  4. Financial pressures confronting the merged organization
  5. Level of confusion or ambiguity regarding the merged organization’s power structure
  6. Geographical distance between the merging organizations …

Videos