Mergers and acquisitions (M&A) are an integral part of the business world. Organizations consolidate to pool resources, experience and finances which helps achieve business growth by expanding reach, improving competitive edge and increasing profits. Post-closing M&A integration must be considered.
While the primary intention of every acquisition is to create stronger synergy, not all acquisitions end up being successful. Many acquisitions collapse because they fail to properly integrate the culture and processes of the two companies. Employees of a company strongly relate to their organization’s culture, but when this is overridden or completely transformed, they feel let down. This can reduce employee morale and create distrust toward the new owner.
The way to achieve a successful merger is by following a disciplined post-closing M&A integration plan. Here’s how this can be done:
1) Prepare in Advance for Post-Closing M&A Integration
The post-acquisition planning should start right at the moment when the acquisition becomes certain. This gives enough time for the management of the acquiring company to understand how the acquired company operates and what steps should be taken to fully integrate them with the existing company.
2) Balancing the culture
The acquiring company and the acquired company may have different work cultures, objectives or leadership roles. If the management of the acquiring company takes decisions without understanding the organizational structure of the acquired company, it could create dissatisfaction among their employees.
Conducting a cultural audit can help understand the differences and identify an action plan to integrate the two cultures. Based on the cultural audit, resources and efforts can be directed to achieve the desired cultural balance. Employees are important stakeholders of the company and should always feel they are being taken care of.
3) Effective Communication
When a new company is formed, a new vision also emerges along with it. The acquisition announcement and plan should be clearly communicated to all the stakeholders – employees, suppliers and customers. Communicating the new vision effectively is important to keep them committed to the new goal.
In the initial days, there can be confusion and hostility among the stakeholders. Sharing timely and prompt updates will keep them updated and aligned with the goal of creating a strong synergy of the merged companies. The communication should flow from the top leadership to foster credibility.
4) Defining Resources and Teams
Following the closure of the acquisition, a senior group from the management of both companies should be formed. The group should identify the financial and leadership resources necessary to take the merged company forward. Lack of resources could lead to functional problems that may impact the working of the company. Ideally, the group of senior leaders should be formed soon after the merger.
The leaders should then create a post-acquisition integration team that will create a roadmap and complete the integration process. Personnel from different departments like HR, Sales, IT, etc. of both the companies should be made a part of the merger integration team. They should work together to successfully integrate the functions of the two companies and encourage information sharing between employees, at all levels. This is a critical step in ensuring efficiency in day-to-day operations
5) Work on the Integration Plan
The leaders of the post-acquisition integration team should come up with a specific and time-based action plan. This includes fixing the roles and responsibilities of various stakeholders, setting new communication strategies and defining key milestones. The merger integration action plan should be structured and properly documented with definite time frames to achieve them.
It is important to establish consensus on the objectives among the stakeholders of both companies. Defining everything will ensure there is organizational alignment during the integration plan which is crucial to achieving business growth.
6) Evaluating Leadership
Once the integration has been completed, a leadership evaluation exercise should be conducted to identify those who don’t fit in the merged entity. Appropriate steps should be taken to find new roles for those leaders.
If you’re looking for business growth by way of successful merger opportunities, reach out to us.