Capturing Deal Value through a successful PMI

Capturing Deal Value through a successful PMI

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Traditionally M&A deals are known to be explored for either growing a company’s market share or because the company believes it can capitalize on cost savings. When it comes to M&A integration, speed of the integration is considered a mantra of deal rationale success. The first 100 days are considered crucial for acquisition success.

The first 100 days are ideal for defining a strategy for accomplishing deal rationale objectives. At this stage, it is critical that you not only concentrate on possible cost savings but also commit to communicating in a way that will drive your team to reach the established goals and swiftly integrate them into day-to-day operations following the acquisition. Things might get confusing for everyone if you don’t use the first 100 days of your company’s development to make sound decisions about where you want to go and what you want to accomplish. As a result, it’s critical to build a business strategy during this time that also outlines effective ways for new owners to join forces with your team in helping meet goals.

Moreover, the first 100 days right after you buy the business is a very crucial time period as well because it is when your organization and its stakeholders should remain as accommodating as possible of any changes that need to be implemented post-deal! A detailed PMI checklist entailing all the general guidelines and steps needed for executing a smooth Post-Merger Integration process can be extremely helpful right after the acquisition, easing out the complexities for you and your team in the M&A process. If this time is not utilized properly, things may take a turn when there is no help from your proven strategies to reap the benefits, meet new objectives and avoid risks.

“Involving the Integration leader early on is very important. It means that the transition starts happening before the deal is even closed. One of the organizational structures to enable that to happen is to have your IMO under or as a part of the Corporate Development Team.” – Russ Hartz. Our Webinar with our Guest speakers Russ Hartz and Christina Ungaro on “Best Practices for M&A Integration Success” brings out the best in M&A Integration for you!

While we covered Key Components to successful integration in our blog “A guide to seamless Post-Merger Integration”, it is also important to take note of the risks or hurdles involved in a post-merger integration.

Risk Identification for a successful PMI:

Lack of Due Diligence

Due diligence is one of the key steps whilst preparing for M&A transactions. Prior to the transaction, the buying company should follow a robust information-seeking process and assess the selling firm’s financials, contracts, customers, insurance, and other pertinent information. This will help the company avoid being mixed up in obligations such as litigation issues and complicated tax matters to name a few.

Miscalculating Synergies

Several problems can arise if the organization making the acquisition doesn’t take correctly calculate the synergies between the two companies. Wrong notions about synergies arising out the synergy of the two companies can lead to deal failure.

Lack of a clearly defined Integration Plan

Assigning an individual as an in-charge of the integration efforts is the best way to make sure things get done. While some organizations select a single Point of Contact it is advantageous to select co-leaders from each organization to be involved in the process.

Failure to execute against the plan

Creating an Integration plan that is achievable is ideal for achieving the goals of the deal rationale success. While developing a plan is easier executing the same can be a challenge. The role of the Integration Manager or Integration Management Team is to validate the achievability of the plan.

To sum it all up, the success of a Post-Merger Integration requires enormous effort and coordination.  To get the right PMI mix involves incorporating several organizational systems, assets, people, and processes.