All mergers and acquisitions are prone to risks. The questions associated with your business pursuit are endless: Is it possible for your finances to take a hit along the way? How can your company keep its focus as it joins another company?
If you are considering taking the risk, focus on the synergies, value drivers, and integration plans as soon as negotiations begin and before the transaction closes. It also helps to partner with a consulting company specializing in mergers and acquisitions.
Post-Merger Integration: Finish Strong by Starting Early
Start by defining and managing post-merger integration activities to ensure a successful transaction. Doing so can minimize your risks, as well as avoid missed opportunities. For example, if your integration command consumes much of your time and focus, the company’s leadership — as well as your employees — will lose sight of the primary goal of the business.
To ensure successful integration, consider the following steps:
- Begin the integration as soon as the deal is announced. Feel free to plan for the merger even before the announcement of the agreement. Once it’s official, immediately address the following factors:
- Decide if your company should seek assistance with a consulting firm. If you’re experiencing technical skill constraints or internal bandwidth concerns, a consultant can help you execute your integration plan successfully.
- Identify pre-close requirements and considerations such as:
- Intellectual property
- Financial operations
- Data room creation
- Management structure
- Sales and operations process
- Customer and employee retention
- Material contracts
- Create a vision statement to explain how the deal will improve the company’s fundamental structure. Your vision should illustrate where the risk lies, as well as the potential growth for profit.
- Select your M&A integration team members. Your merger and acquisition team should include skilled and motivated employees from both companies. Working on the integration team will require a tremendous effort from your organization and the chosen team members. Look out for signs of fatigue to minimize the risk of losing talent.
- Plan your integration structure. Divide all merger and acquisition activities into categories like facilities management, manufacturing, information technology, finance, and legal. Teams in charge of functional areas should be assigned to perform integration tasks within their areas of expertise.
- Draw up an internal communication plan. Set your company’s expectations by creating critical communication and messaging structures for employees, shareholders, and customers. Your company should be consistent when communicating objectives, goals, risks, and changes associated with the merger.
- Determine your exit criteria. Know when the merger is officially complete. An exit criterion informs all teams when the integration will be finished and where everyone should head after. Build your exit criteria around important departments and processes like accounting and finance, human resources, IT, and others.
The Bottom Line
Start early to finish strong — this is the key to successful integrations. When you determine your needs and potential challenges beforehand, you can plan for tomorrow and minimize your risks. Also, consider working with an expert so you can manage the integration and still focus on your business.
