“What makes a Merger and Acquisition deal completely successful is a prudent M&A strategy, placed right from the initial phase of the project, supported by global integration programs that are designed to deliver on synergy goals and achieve operational efficiency”
Mergers and Acquisitions are considered to be fast-paced, high stakes, and time-intensive events. They can often be considered to be complicated because of several interdependencies involved throughout the process and also because of the changes in different stakeholders as the deal progresses. But, Mergers and Acquisitions also provide tremendous opportunities for creating and sustaining breakthrough value.
What makes a Merger and Acquisition deal completely successful is a prudent M&A strategy placed, right from the initial phase of the deal, supported by global integration programs and services which are monitored by the IMO(Integration Management Office ) till 100 days of the Integration process. The methodology of the integration process is intricately designed to deliver on synergy goals and achieve operational efficiency.
The biggest challenge that lies in the way of successful integration is the key to avoid the risks of a Merger or Acquisition and realizing its potential value. Also, the dynamics of this comprehensive process states the fact that no two deals can be exactly integrated in the same way, with the same priorities, or treated exactly under the same timetable. The leaders of such M&A integration programs are often asked to step outside their daily roles and lead a cross-functional program through a high-impact, high-profile initiative. Navigating complex situations successfully; building cross-functional relationships and bridging cultural gaps while balancing efforts from a variety of stakeholders makes every Merger and Acquisition Integration unique.
Post-merger integration: Start early to finish early
Most of the time, people consider the process of Merger or Acquisition rife with risk. At times, it can be tough to realize the maximum potential of a transaction as it poses complicated and unique challenges and we cannot ignore the fact that no two deals are alike. For that reason itself, clearly defining and managing the post-merger integration activities becomes one of the most important elements of a successful transition. The benefit of a rigorous post-integration approach can help in minimizing risk, avoid missed opportunities and unintended consequences and help the project reach its optimal value.
These days we regularly get involved in the integration of Mergers & Acquisitions. According to an analysis report by Bain & Company, over 70 percent of this proportion fails to deliver the anticipated share value. One of the possible reasons for this kind of failure could reflect the incapability to integrate different corporate cultures. Using our years of experience, we would like to highlight some of these risks and lessons below which can help in minimizing these kinds of risks and ensure a better M&A integration deal.
Following the money
An objective explanation of how the deal can enhance a company’s core strategy should be the primary goal of every company’s integration process. A clear deal thesis helps us in understanding where money can be made and where do the risks lie. It should be the pivotal point of both the due-diligence on the deal and subsequent integration. Aligning the integration task forces around the key sources of value to translate deal thesis into tangible non-financial results so that everyone in the organization can understand and work accordingly should be the second task in the priority order and in this way, the teams should naturally understand the value for which they are accountable so that they can produce bottom-up estimates right from the start.
Resolving people’s issues and internal conflicts quickly
Selecting people from both organizations who are enthusiastic about the vision and are willing to contribute the most is as important as designing the deal thesis for the company. Since you have a specified time and you would not want to respond to any headhunter calls resolving people issues quickly or hiring people can help you in getting the energy focused on getting the best possible value out of the deal.
Announced the deal? Start the integration process
The ideal situation for the acquiring company should be to begin planning the integration process even before the deal is announced. Announcing the deal highlights certain priorities that should be immediately addressed. Taking the major decisions first and going up the ladder in the process should be the criteria but one should not lose patience meanwhile or lose objectivity or shortcut the necessary processes.
Managing the integration team and handpicking the leaders of the integration team
The creation of endless templates and processes to manage an integration can make people distract from critical issues and suck out all the energy from the motivated team. To begin with, making a decision roadmap for managing the organization is preferable to ensure the right people are deployed for the right work with the best available information. Apart from that, it’s equally important to have proper coordination between the task force leaders and the rest of the employees for the smooth functioning of the entire process and that is why it’s imperative to handpick the leaders of the integration team.
Committing to a culture
One of the biggest problems that the process of integration encounters is the cultural crash that arises. There is a good amount of loss of key personnel (and competencies) and also a lack of necessary investments. Every organization/firm has its own culture and they need to figure out how they want to get things done there. Usually, after an acquisition, the acquirer wants to maintain its own culture but whatever may be the situation, sticking back to the culture that you want to see emerge from the integration should be put into practice. Company leaders should try to eliminate any type of cultural differences and take every opportunity to role model the desired behaviors.
Maintaining momentum in the base business of both companies
However dreamy and glamorous the idea of integrating two organizations might sound, it involves a lot of work. The future shape of the company completely appears to be in the hands of the integration task forces. Therefore, it’s imperative to manage both the ongoing businesses and monitor the base business closely throughout the integration process to make sure that things stay on track.
Apart from this, Focusing on the fundamental processes, Coordinating decisions by assigning the right roles and responsibilities, and Sticking to the Timetable are a few of the other things that should be kept in mind while going through an M&A Integration process.
MergerWare to run successful global integrations
MergerWare’s idea of revolutionizing the M&A process enables executives to elevate value creation at the core of the integration strategy while allowing them to focus on operational efficiency from day one.
As we know, many M&A deals remain unsuccessful because of unestablished success criteria, MergerWare has been instrumental in bringing all the stakeholders together right from the initial phase of the deal-making process to ensure collaboration among cross-border teams.
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