Post-merger integration support


Post-merger integration (PMI) and M&A support best practices

On this page, I want to give you some insights in post-merger integration best practices. In M&A processes it is very important to prepare early on for the post-merger integration phase. This increases the chances for a successful integration. Below you find some of the best practices for the post-merger integration process.

Here is an overview of the best practices for the post-merger integration process in M&A:

  • Cultural awareness
  • Synergies
  • People
  • Strategic vision
  • Communication
  • Create ownership of workstreams (integration teams)
  • Timing (start early)
  • Flexibility

Cultural awareness

Best practices in the integration of the cultural field are crucial. Culture is the most important source of unsuccessful M&A. The two cultures must first be understood and then be brought together. As cross-border mergers and acquisitions become a larger part of M&A, cultural items and differences start to play a bigger role. In order to achieve success in the post-merger integration phase, it is important to assess cultural differences early on in the process. During the M&A and post-acquisition process frequently assess cultural progress and understand how it differs from your past expectations.

Synergies

An important best practice is to understand the target and the expected deal synergies. Synergies have to be discovered early on in the process and assigned to owners (see the section below about workstream owners). Synergies are often the main reason why an M&A project is started. If the expected synergies are not fully realized, the acquisition is not completely successful.

People

People are the obvious part of an M&A and post-merger integration project. Best practices around people and leadership are numerous. HR should be treated as a strategic partner in the M&A process. From a human resource standpoint, the acquiring company must create a protection plan for their “A” players as well as for the “A” players of the acquired company. A merger makes “A” players vulnerable to leaving to be approached by headhunters. Retention of valuable employees that help with the transition and the integration of the acquired company is an important best practice.

Strategic vision

The management team of the buyer needs to have a clear strategy and vision. People have to collectively work together based on the new common vision. During post-acquisition integration, the best practice for the leadership is to establish a strategic plan and structure. Decision making action steps are incorporated into this structure.


Communication

Clear communication is an obvious but underestimated best practice in M&A and post-acquisition or post-merger integration. The best communication is consistent both internally (associates, board) and externally (to shareholders and customers). It is important to communicate early and often as silence coming from the top management is counterproductive. I have seen senior management convey a different message or leave an information vacuum. Employees will have their own ideas and fill that vacuum about what is ‘probably’ going on. Most employees will be talking about the expectations they have and possible worst-case scenarios.



Create workstream ownership (and integration teams)

In an M&A and especially in a post-merger integration project you have to create workstream teams to lead the integration. Detailed action plans have to be prepared early on. Dedicated integration resources have to be assigned to teams for a successful post-merger integration project. Participation in the process from key members of the management team is crucial. The workstream post-merger integration teams should be focused on core processes such as revenue retention, product design, marketing and supply chain management. In M&A best practices, these workstream teams set clear post-merger integration targets.

Timing (start early)

Preparation and speed are vitally important. Make changes as quickly as it is anticipated. In the beginning, people expect change and the window of opportunity should be used. Therefore, there is a sense of urgency that must accompany the integration process. By applying best practices, the probability of M&A success goes up considerably when the key elements of post-merger integration are started long before closing. During the post-merger integration process change is expected. Therefore, you have to take advantage of the M&A process and make the necessary changes. The integration period is an excellent time to make these changes.



Flexibility

Our best practice advice is that there needs to be some flexibility in the post-merger integration and M&A processes. The idea that each deal needs to follow the same by the book approach is incorrect. Instead of using a one size fits all approach for post-acquisition integration, the integration process must be customized to the specific M&A transaction situation. This flexibility can include differences in the timing needed to achieve synergies or delays due to regulatory approval.