Integration planning therefore goes hand in hand with value creation in mergers and acquisitions. BCG has deep expertise across a wide range of industries with deep knowledge of all aspects of M&A and post-merger integration activities to help you realize the full value of your transaction. If you have good management, the integration usually works better or cross-functionally. Delegate responsibility to these teams and regularly review progress. We reviewed the basic checklist for integrating acquisitions. Now it`s time to look at the steps for the time after the transaction closes. Early success in an integration can help build trust in a deal and reassure skeptics. [9] Sometimes target companies are acquired specifically for their talent. For the majority of acquisitions, and especially for acquisitions of innovative companies, it is crucial to retain key leaders and talent. These individuals should be identified and involved early, preferably as early as day 1, right after the transaction closes. One option could also be to appoint key talent as cleanroom members, but this could be difficult given regulatory concerns (see above) and the risk that the deal will not be struck and those talents will be forced to leave your company. In any case, a talent management strategy is crucial.

We have divided this checklist into sections that cover the main areas of focus of post-merger (or post-acquisition) integration. It is also important for people in key roles to complete a post-merger integration questionnaire to help them understand and align goals. There are four typical types of post-acquisition integration. Distraction is a death trap in mergers and acquisitions. During the onboarding process, you should strive to maintain momentum at all costs. This essentially means that the post-merger integration should not begin after the closing of the transaction, but already in the due diligence phase. In this phase, the synergies between the buyer and the target company are defined and the integration manager can evaluate and validate these synergies (timing). Integration will also be addressed to ensure that new governance, desired management structure, control and reporting processes are in place.

To illustrate the role of the Director of Integration, we will compare the M&A transaction to the purchase of a home – as we have done before. Post-merger integrations typically require more communication with employees than day-to-day operations. [7] Fortunately, many of the employees` questions can be anticipated. [8] In other words, billions of dollars are lost every year because companies do not properly implement integration after an M&A transaction. That`s why integration is so important for mergers and acquisitions. Your due diligence team is another key part of integration, helping to deliver integrated solutions through an understanding of each other`s processes, documentation, and culture. Operational challenges typically include lack of strategic direction, need to manage change, integration of culture and processes, alignment of stakeholders, and regular performance evaluation. Whatever plan you create, it`s important to set milestones in the onboarding process early on. Know what changes are needed and when. As an oft-repeated mantra about mergers and acquisitions says, “what pulls gets dirty.” Set clear exit criteria. If a buyer does not establish clearly defined exit criteria for the integration of the company`s activities, it will not be difficult for anyone to know when it will be officially completed.

Clear exit criteria help onboarding teams know what needs to be done and when. From there, they can work backwards to determine the tasks they need to complete to meet the criteria. In general, there should be exit criteria based on key processes and departments such as accounting/finance, legal, human resources, information technology, sales, operations, and marketing. Each integration team should develop appropriate exit criteria to determine when integration will be completed for their respective region. One way to involve the integration team in the process at an early stage is to set up a clean room before closing. In particular, in the case of two proposed competitors, the exchange of sensitive information is subject to strict antitrust rules. In order to maintain its independence, the “clean room” or “clean team” is a separate entity consisting of (external) consultants and/or representatives of the buyer and seller (also subject to official approval). This group is able to identify areas where the (merged) company should focus in the first 100 days and beyond. This helps kick-start synergy capture and supports the realistic value of the goal mentioned above, often offsetting the costs associated with setting up such a clean team.

However, it is important to keep in mind that if the agreement fails in some way, the representatives of the two companies that have been installed will not be allowed to return to the buying or selling party because they are exposed to sensitive competitive information and will therefore have to leave the company. Absorption occurs when the acquiring entity fully absorbs the target company, including all processes, organizations and procedures. First, and with the above principles in mind, it`s time to walk you through our integration checklist. In terms of value, alignment, and structure, what are the most important steps for a successful integration strategy? A post-merger integration checklist (or M&A integration checklist) is a step-by-step program to keep teams on track as they prepare for a merger or acquisition. You can also think of the PMI checklist as the backbone of the entire corporate merger plan, as it covers all departments and employees and goes far beyond the typical 100-day plan for post-merger integration. Plan the integration structure. Divide integration activities into functional categories such as sales, manufacturing, service, facilities management, human resources, law, finance, and information technology. Functional area specialists should be responsible for defining and implementing integration tasks in their area of competence. As a result, onboarding takes place faster and easier, as experts and users are closely involved in the process. Some cross-functional categories require the input of multidisciplinary teams to capture desired synergies and positive outcomes. Most importantly, the integration plan must be clear.

The tasks and responsibility for these tasks, as well as specific schedules, are key to successful integration. A poorly planned integration structure will lead to turbulence. Business skills should also be assessed based on their current and future maturity. Teams can then drill down into the application landscape based on criticality, integrations, and dependencies (see Figure 4). PMIs are often treated as a single process, but each has its own speed, style, focus, and pace. PMI`s strategy and process must be adapted to these differences. Here are some examples of BCG`s post-merger integration tips with clients on their post-merger integrations: This misstep can result in the loss of employees and customers in the very critical early days of the integration, when competitors tend to follow both employees and customers of the target company. But first, let`s look at the definition of M&A integration. A post-merger integration requires more than just back and forth between the acquiring company and the target company. A merger is a stressful time for the entire company and therefore requires a top-bottom communication strategy.

Select Onboarding Team Members. Choose highly motivated and qualified employees from both companies for the integration teams. Working in the onboarding team requires a tremendous amount of effort on the part of the acquired organization, resulting in an extremely stressful workload. Pay close attention to signs of fatigue in the team to minimize the risk of losing important talent. Identify the future roles of these team members in advance. Too often, onboarding teams fail because there is no plan for the future of the people selected for the team. Common issues that can arise with post-merger integrations include resistance to change, shared loyalties, employee trust issues in leaders, unclear roles and responsibilities, unclear reporting relationships, communication entanglements, job insecurity, unusual employee turnover, and internal struggles. [10] [11] As Managing Director of Bridgepoint Consulting, Manuel leads the company`s growth strategy and geographic expansion initiatives. His experience includes over 20 years of experience in business process reengineering and corporate governance with a range of public and private sector clients.