How Robust Is Your M&A Integration Process?
Contributor Anirvan Sen
How robust in your M&A integration process?
I’d start by planning the 6-stage integration planning process:
Alignment on M&A integration elements: In most M&A integration projects, apart from the core team, other projects and extended team members do not have a comprehensive understanding of M&A and integration elements. This stage deals with onboarding, mobilization, creating awareness, transferring knowledge to the integration team, and most importantly, getting the core team aligned on the details.
Depth of integration: Just like leadership teams need to determine whether the acquired company is going to be tucked in, preserved, or merged, similarly every function also needs to think about the same principles. To make it worse, there are plenty of examples at a company level, where decisions are made to keep the acquired company independent, but the executive leadership demands a consolidated financial reporting, HR demands a unified appraisal and salary review cycle and IT teams may demand similar levels of information security and data protection. All these questions have an impact on the depth of integration that is required. How independent versus how interdependent functions need to be, can vary massively between integrations. And that is why integration teams must analyze these aspects upfront during an integration.
Organization Structure and Operating Model: The third step is defining the organization structure and target operating model. While there are specific acquisitions where the acquired company is largely left alone and their operating model is “preserved,” in most acquisitions the acquired company is either absorbed or merged. In both cases, too much money is left at the table by continuing with the old independent organizational structure and unaligned operating model thus getting into bureaucratic wrangling and political ramifications. Moreover, without a unified customer journey defined not much cross-selling and up-selling happens either. Organization structures, operating models, and customer journeys form a key part of the future state of the acquired organization.
Transformation: So far, we have discussed what needs to happen in an integration. We mentioned the creation of the future organization, operating model, and customer journeys. But how is the transformation going to be achieved? This is where the transformation stage comes in. It includes Change Management, Communication, and Cultural Integration. This stage is extremely important in terms of managing people and leadership. Remember, many integrations fail due to insufficient focus on these aspects. Therefore, thorough deliberation and planning are required on these elements.
Implementation: Once you have gone through all the critical principles of integration, you now need to put all these elements into an implementation blueprint. Keep in mind that you may have some initial timelines and resources already chalked out. During this stage, you finalize the integration plan. You staff your integration management office, you finalize the tools and templates that you are going to use, you develop an advanced integration timeline plan, and most importantly, you build a list of integration-specific objectives. By this stage, you would have also created an integration calendar, issues, and escalation management as well as set up a steering committee rigor.
Functional Calibration: Once the integration plan has been created centrally, it must be shared, socialized, and calibrated with various functions and business units. During the last stage, you need to give as much importance to individual functional components as to inter-departmental activities. Moreover, each of the functional workstreams creates their sub-project plans based on the main plan as well as informs the main team in case some adjustment needs to be made to the central plan.
Anirvan Sen https://www.linkedin.com/in/anirvansen
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Sebastian Amieva
Investor / M&A Expert / Mentor
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