Best Practices for Successful Post Merger Integrations

Throughout the many years we’ve been handling deals, we’ve learned a lot about successful post-merger integration. We know, for example, how important it is to keep integration activities front of mind as you complete earlier phases of the acquisition, and why centralizing integration processes as part of your overall deal activity leads to increased value.

12 M&A integration best practices

From this M&A integration experience, we’ve come up with the following best practices for you to follow.

1. Don’t over-estimate synergies

A quarter of all managers overestimate post-deal synergies by over 25%. So make sure you’re conservative with your synergy estimates to give yourself a better chance of realizing them when you’re up against all the challenges of integration. 

2. Complete a merger and acquisition risk assessment

An M&A risk assessment will enable you to be able to identify M&A integration risks and other threats to the success of the deal early on. 

3. Be smart about due diligence

It almost goes without saying—but not quite. Be absolutely meticulous in your due diligence. But work smarter, not harder. Use an advanced data room and deals platform like Ansarada to streamline due diligence, dotting the i’s and crossing the t’s faster.

4. Start planning integration early

Don’t treat integration as an after-thought or somehow separate to the deal itself. Your integration planning is fundamental and should begin even before the deal is announced. 

5. Involve operational experts in integration planning

During the merger of two global high tech companies, the operational management from both sides were heavily involved in integration planning. 1500 managers were involved, representing about 1% of the entire personnel. Such vast involvement of operational experts ensured that not only were synergies realized, they were exceeded by more than $1 billion.

6. Ensure you have enough resources to maintain momentum

A major hurdle for integration is the enormity of the task and the requirement to manage business-as-usual operations at the same time. Be prepared for this challenge and ensure you have enough resources to handle it.

7. Communicate, communicate, communicate

Effective communication during periods of significant change is always a challenge, but the outcome of poor communication during M&A integration can be quite severe. If you feel like you’re over-communicating about the integration, it’s probably about the right amount.

8. Review leadership capabilities

Frequently, post merger integrations struggle to achieve value because of issues with leadership. Analysis conducted for Harvard Business Review found that senior leadership capabilities within acquiring companies plus middle management leadership within target companies have the greatest effect on integration success. So critical is leadership to the success of a merger that the author concludes that the collective leadership capabilities of acquiring and target companies should be part of the due diligence that precedes an M&A offer.

9. Develop an equitable redundancy package

Resistance to change is especially high in the upper echelons of the business, since there are far fewer jobs available on the organization chart. So make sure you develop equitable redundancy packages for those that are going to be leaving. 

10. Engage a change consultant

According to McKinsey, approximately 95% of executives say cultural fit is vital to an integration’s success. This can be one of the more complex aspects of integration to get right. An external change consultant can be helpful in smoothing issues with cultural integration.

Learn more: Post Merger Change & Project Management

11. Develop a realistic timeframe for infrastructure integration

IT integration challenges like data security during transition, and knowing which systems to keep, can impact the value of the deal and the planned synergies.

12. Put customer experience at the heart of decision-making

A frightening outcome of a poorly executed integration is loss of customers. Uncertainty over who’s doing what, which organization’s processes to follow, and stress caused by the integration itself can mean customers are often forgotten. Ensure that every integration activity is evaluated in terms of customer experience.

FAQs

What does M&A integration best practice look like?

At Ansarada, we’ve boiled down M&A integration best practice to the following 12 steps:

1. Don’t over-estimate synergies

2. Complete a merger and acquisition risk assessment

3. Be smart about due diligence

4. Start planning integration early

5. Involve operational experts in integration planning

6. Ensure you have enough resources to maintain momentum

7. Build a communications plan

8. Review leadership capabilities

9. Develop an equitable redundancy package

10. Engage a change consultant

11. Develop a realistic timeframe for infrastructure integration

12. Put customer experience at the heart of decision-making

What are the communication strategies in post merger integration?

A smart communication strategy for post M&A integration is over-communication; if you feel like you’re bombarding employees with updates, it’s probably about the right amount.

How long does a post merger integration take?

A post merger integration can take between 3 and 6 months, with the first 100 days being critical. To avoid delays, which can derail value realization, you can leverage M&A transaction and post merger integration software like Ansarada, which offers secure deal workflow, data room, and integration management features.