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Strategies for Successful Merger Integration

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Strategies for Successful Merger Integration
Read our full white paper for more strategies for executing a successful merger integration.

Businesses routinely look to mergers and acquisitions as a growth strategy to expand into new markets, increase shareholder value, or even to realize tax benefits. When executed successfully, a merger can be a significant benefit to a company's bottom line; however, the majority of acquisitions fail to deliver on their expected value. What can your company do to help ensure that your merger integration is successful?

Merger integration is a complex process; therefore, a comprehensive plan should be developed and implemented to manage difficult decisions and help maximize the potential of the new organization. The main objective is to move quickly without missing opportunities and with a minimum number of disruptions to the organization.

There are several aspects that companies should focus on during an integration, incorporating key milestones related to day one readiness and during the first quarter of operations. Those include:

Day one readiness

  • Prepare early, optimally during the due diligence phase
  • Perform a full process review to identify best practices and potential process improvements
  • Develop a day one plan that incorporates regulatory and organizational components as well as a communication plan for key stakeholders
  • Prioritize key elements for day one such as financial reporting and cash management while relegating non-critical functions to phase two initiatives

First 100 days

  • Implement a tracking program to determine how critical functions are performing within the new company
  • Develop a process for identifying process improvements

Process improvements

  • If time allows, consider letting both companies run independently to identify best practices
  • Evaluate differences between the two companies and what can be adopted into the new company

There are several common issues that often derail mergers, including a lack of planning, underestimating the scope of the initiative and failure to communicate. These issues can become apparent within any facet of an integration, and can result in inefficiency during the process and an increase in costs involved.

Cultural considerations are also often underestimated in a merger environment, and it cannot be assumed that synergies are going to be achieved quickly. What the merger is going to mean to the people involved such as employees, customers and vendors, tends to be overlooked and can be a significant concern, if not addressed proactively.

Management must be upfront in communicating the goals for the merger as well as how business processes will change in the combined company. Concerns regarding topics such as relocation, the shifting of job roles and any new tools or software that will need to be learned are often prevalent in a merger environment. The fear of the unknown can be very real for those affected by the merger, and it can have a significant effect on productivity.

To achieve a successful merger integration, many companies turn to a third party to help implement strategic plans and track progress toward goals. Your internal employees have a day job and it is difficult for them to dedicate the time that is necessary to manage such an important endeavor.

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Michael Grossman
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