M&A integration

Companies continue to stumble in four areas of post-merger integration:

  • Missed targets. Companies fail to define clearly and succinctly the deal's primary sources of value and its key risks, so they don't set clear priorities for integration. Some acquirers seem to expect the target company's people to integrate themselves. Others do have an integration program office, but they don't get it up and running until the deal closes. Still others mismanage the transition to line management when the integration is supposedly complete, or fail to embed the synergy targets in the business unit's budget. All these difficulties are likely to lead to missed targets-or an inability to determine whether the targets have been hit or not.

  • Loss of key people. Many companies wait too long to put new organizational structures and leadership in place; in the meantime, talented executives leave for greener pastures. Companies also may fail to address cultural matters-the "soft" issues that often determine how people feel about the new environment. Again, talented people drift away.

  • Poor performance in the base business. In some cases, integration soaks up too much energy and attention or simply drags on too long, distracting managers from the core business. In others, uncoordinated actions or poorly managed systems migrations lead to active interference with the base business-for example, multiple (and contradictory) communications with customers. Competitors take advantage of such confusion.

  • Inability to attract new talent.  The newly merged business is not likely either of its predecessors and so you may likely not have the right talent in either company to make the two businesses integrate and operate as one with all the desired synergies.

Successful integration-the key to avoiding the risks of a merger or acquisition and to realizing its potential value-is always a challenge. And it is complicated by the simple fact that no two deals should be integrated in the same way, with the same priorities, or under exactly the same timetable. But 10 essential guidelines can make the task far more manageable and lead to the right outcome: