- November 28, 2019
- Posted by: Ramkumar
- Category: Mergers And Acquisitions
Choosing the best M&A integration practices is necessary
The majority of M&A integration is not successful. The financial proposition is the deciding criterion for the majority of the M&A transactions. But once the deal closes, success relies on management performance. And it does not matter how well thought the deal is, it is not a success if management fails to get it to work.
The acquirer should have the right M&A integration strategy, and the timing for the integration has to be correct. The right people should be there in the right places. It’sIt’s not sufficient to be busy—one has to be working doing the exact things.
7 Best M&A Integration practices
Most of the best practices in M&A integration applies only to specific situations. These seven practices mentioned below apply to any M&A integration.
M&A Integration practice 1 – Don’t try to establish one standard culture
Every company has a different corporate culture. Hence after the acquisition, many integration teams make the blunder to apply a traditional culture across the combined organizations. This approach is a blunder and will misfire.
Companies can subscribe to a few shared values and implement operating principles that are common to both organizations. The integration can enforce a small handful of company-wide standards during integration. Beyond that, the integration office should lead the merger towards corporate diversity. They need to focus on the friendly co-existence of diverse people working in different ways, concentrating on shared goals but not affirming to universal corporate culture.
The integration team needs to recognize this fact and should achieve the above approach successfully. When the acquirer pulls the cultural mix approach, then they maximize their chances to exceed the synergies targets.
M&A Integration practice 2 – Score quick wins
Speedy progress will benefit balance the uncertainty from the critics of the transaction. By achieving a rapid pace, the integration team shields the deal by producing hard proof that things are moving in the right path. The most credible evidence is a financial success. The famous adage “Money doesn’t talk; it screams” will help lead to paying recognition after the numbers stack up positively. If the integration team can show quick merger payoffs that carry dollar signs, the dissenters start losing credibility, and resistance begins to decrease.
M&A Integration practice 3 – Communicate thoughtfully
In the beginning phases of the M&A integration, one needs to exercise restraint and mouth control. In the overcharged environment of a merger, virtually anything a manager say would go against him. Hence the integration manager needs to be careful in what they say, how they speak, and to whom they answer. The integration managers should realize that what they express can be taken as a firm’s committal. The target company’s employees can respond to the slightest suggestion and shall interpret more into the integration team’s statements that what they meant.
M&A Integration practice 4 – Re-recruit your keepers
After an acquisition, one can safely assume that every employee in both organizations is considering other employment. The integration team should take a closer look at the current situation and then identify the key employees who will be most critical to the success of the merger. They should make a record of employees whom they cannot bear to lose. The above exercise should finish quickly, and a re-recruitment effort should be directed to retain the right employees with the right skillsets.
M&A Integration practice 5 –Choose the best
Too frequently, decisions are meant to accomplish balance rather than the best. Proper management gets spared on the platform of compromise. The integration period is the time to go for organizational ascents. The integration team needs to classify and engage the best employees regardless of which company provides, and that makes the combined entity more excellent, more agile, and more competitive. They need to pick the most suitable instead of playing the game of politically correct tradeoffs.
M&A Integration practice 6 –Institute apparent authority
The acquirer should be precise, brief, and fast in setting control. On account of confused political sensitivities, though, merger management often gets stuck in achieving a consensus. While this consensus-building does not happen, there will be infighting, and people stake out their territories in ways assured to create trouble. The governance team should immediately make decisions and create a reporting structure for the post-integration setup. They need to create a role and responsibility for each member of the team. They need to be directive instead of worrying about hurting egos. This task is tough but unavoidable.
M&A Integration practice 7 –Take long-overdue steps
In the early months of integration, the best an integration team can do is manage the obscurity. At the initial stage, the integration team cannot afford to behave like a boss. The initial uncertainty period will be rough, and the ride would be scary. Once the uncertainty period gets over, then one can cover many miles. The uncertainty period also gives an opportunity during which the management can take steps that can transform the combined entity. It is like having a license to make sweeping changes to take long-overdue actions. The integration team should utilize this moment, as there would be no resistance to these changes. They should not squander this chance to transform than to integrate merely.