Ultimate Guide to M&A Integration

What is M&A integration?

M&A integration refers to the process that takes place after a merger or acquisition to integrate the two previously separate companies. It is also commonly referred to as “post acquisition integration”, or “post merger integration”.

Types of post-merger integration

Experts in mergers and acquisitions recognise four main categories of integration. These are: absorption, preservation, holding and symbiosis.

Learn more: Types of post merger integration

Who’s responsible for M&A integration planning & execution?

Post acquisition integration is the responsibility of numerous key players. 

Senior Executives

During a deal, a visionary CEO is essential to guide employees, shareholders, and customers through a confusing period of upheaval. In particular, the CEO is useful for alleviating fears and explaining how the deal aligns with overarching strategy and mission.

For the CFO, once the transaction plan has been developed, it’s all about maximizing financial synergies between the companies involved in the deal. The CIO is responsible for overseeing the IT and infrastructure integration. The CMO is responsible for determining the merged company’s responses to stakeholder queries about changes to service and operations. In fact, each member of the C-suite has a vital role to play in a successful post acquisition integration.

Change Consultants

It can be a huge benefit to have an external change consultant on your M&A integration team, not least because it has a reassuring effect on the acquired company and its employees.

Learn more: Post Merger Change & Project Management

HR

Changes to the workforce, as well as company culture, mean heavy HR involvement. The “human” factors, including employee positions, targets, and benefits, needs to be considered early on in the deal to avoid unwanted loss of employees and clients during the early days of integration.

Deal Team

A smart and efficient approach to post acquisition integration is to ensure the team that handled due diligence is involved. This ensures that synergies can be maximized and no critical data or key risks are lost in transition.

M&A integration playbook: 8 steps to a successful process

The following is a framework to help you understand how to integrate companies after acquisition.

1. Have a clear rationale for the deal

M&A integration begins with the deal itself. Understanding what the objectives of the deal are, where the money is, and what the risks are points you in the direction of the actions to take to be successful in integration. 

2. Plan integration as soon as possible

It’s not so much speed that is of the essence when it comes to successful integrations but forward planning. If you wait until the deal is done before you start to plan your integration, you’ll be far too late. Ideally, the acquiring company should begin planning integration before the deal is announced and the integration strategy should be finalized prior to close. 

3. Set up a “clean team” 

Setting up a “clean room” or “clean team” is a common approach to integration planning. As a separate entity, consisting of (external) advisors and/or representatives from buy and sell-side, this taskforce identifies the priorities that the merged company should focus on in the first 100 days, which are critical. This sets the integration on the right path, however it’s worth noting that if for some reason the deal doesn’t go ahead, “clean team” representatives from buy and sell-side must leave their respective companies due to their exposure to sensitive competitive information.

4. Determine what to integrate  

Depending on the nature of the deal, it may not be necessary to integrate absolutely everything. With the original objective(s) of the deal front of mind, determine where integration is going to provide value and where retaining separation makes more sense.

5. Put passionate people in power

It’s critical to give power to people that are passionate about the vision for the combined company and its future direction. The faster you can fill seats with the right people, the sooner you can refocus on maximizing value from the transaction.

6. Agree to a single company culture

You were two companies. Now you’re one. It’s important to the integrity of the deal and the resulting company’s success that a single, united culture exists post integration. So business leaders need to take a proactive role in exhibiting the desired cultural behaviors.

7. Win people over

Your people are your power. It’s not only vital to win over shareholders and customers with the integration plan, it’s also critical to win the hearts and minds of employees. A thought-out internal communications plan is crucial. 

8. Refocus on core business

It’s easy to become distracted by the excitement and/or complexity of the integration process. However, it’s essential to remain focused on core business operations to ensure momentum is maintained. Customer needs should be front and center, especially as teams and systems are integrating as there may be confusion as to who to contact.

Learn more: Best Practices for Successful Post Merger Integrations

FAQs

What’s the difference between integration and merger?

Integrate and merge are more or less synonyms. We mean the same thing when we say, “we’re planning to merge two companies” or “we’re planning to integrate two companies”. In M&A, integration is often spoken about as happening after the transaction, however successful integrations should be planned in tandem with the deal itself. 

What is the post acquisition integration process?

The post acquisition integration process, also sometimes referred to as post merger integration or M&A integration process, is the workflow required after (or as part of an M&A deal) to integrate the buy and sell-side companies so that they operate as one.

How do you integrate employees after acquisition?

There is no single, silver bullet solution for integrating employees after an acquisition. Your post acquisition integration strategy should consider company values, culture, a shared vision of the future, and solid internal communications to get employees onboard.