Contrary to popular belief that only an acquirer needs a robust M&A integration plan, selling business owners and CEOs also need to collaborate with the acquirer to ensure the deal is a success.
In fact, the deal isn't really a success if it doesn't achieve its desired values because you left the acquirer to their own devices after the transaction to complete the transition and integration.
Here's a detailed look into the entire post-merger integration process to help you understand your role in ensuring a smooth transition and capturing synergies.
The post-merger integration process is quite complex and typically involves the steps below:
Before we look at these steps in detail, we agree that planning and executing a successful integration can be overwhelming.
You'll want to hire the best professionals to help you understand and execute the entire process to ensure the deal is successful.
Our team at Exitwise can help you recruit, hire, and work with the best industry-specific M&A experts who can ensure not only a successful sale but also a successful integration.
Schedule an initial consultation with us today to get started.
An M&A integration framework is a detailed plan and strategy for unifying two or more companies or businesses after a merger or acquisition.
Depending on the deal, the framework includes aspects such as:
To develop an effective M&A integration strategy, consider thorough planning, involving stakeholders early, prioritizing clear communication, aligning company cultures, and managing change proactively.
Some key aspects to look into include:
Let's look at the integration process steps in greater detail:
The best way to set an integration strategy and the principles to guide it is to start early in the sale process, before closing the transactions.
You'll want to agree on who makes the final call, when and if you reach an impasse, which integration method you'll follow, how you’ll keep communications open, and how fast the integration will be.
Your vision can be to integrate the merging entities in an accelerated time frame to ensure the resulting new entity realizes synergies quickly and maximizes profitability.
For the strategy, you can agree to create a steering committee and an integration management office to manage and implement the ongoing integration workflows on either side.
The strategy can define the focus of the integration workflows as follows:
Other guiding principles you can adopt include:
Once you've set up your strategy and guiding principles, you'll want to choose the teams that will lead the integration process.
Most merging entities choose two main integration teams—the steering committee and the integration management office. The steering committee usually includes two to seven high-level executives from either company, while the integration manager is usually a senior executive from the acquiring company.
You may also have a dedicated risk management office to ensure you increase your chances of M&A success.
A change management office is another crucial team for handling any resistance to the merger or acquisition from employees, suppliers, shareholders, or customers.
You'll want to establish the teams long before the transaction closes. You should also assign their specific roles and responsibilities and define their hierarchy to avoid conflict of duties or seniority.
If you fail to plan well for the post-merger transition and integration, you set the deal up for failure. You don't want to be another statistic on the low M&A success rate radar!
The in-depth planning step includes the following aspects:
Some considerations include employee onboarding, maintaining company culture, retaining leadership, prioritizing communication, and offering incentives.
Once you have all your plans set, start the implementation process. Use the integration workflow plans and any other documents you prepared earlier to guide the entire team and individuals.
The implementation stage is as important as integration planning, so you must ensure it flows well at the required speed.
One crucial consideration is to achieve value creation and synergies, which could take months or years.
Going through the entire integration without measuring its success or failure would defeat its purpose. You'll need the means to measure its impact to see where you could improve as time goes.
Post-merger integration software comes in handy for tasks such as:
The entire integration process can differ from one deal to another, depending on factors like the deal structure and types of integration.
Understanding and executing all these steps can be challenging. At Exitwise, we can help you find and manage a team of trusted M&A experts to ensure the successful integration of your business.
As mentioned, change management helps ensure the deal succeeds by minimizing resistance.
Some benefits of change management in the integration process include:
Perhaps the most critical key to a successful integration is having an exit strategy from the onset. Starting your exit plan early can help you get psychologically and emotionally prepared for the sale.
You can also prepare early on how you'll help with the transition and integration, whether or not you remain in the business post-merger.
Having a post-M&A integration plan and checklist can help if you haven’t started early:
The checklist can be a detailed and mutually agreed document where you can tick off integration tasks or steps as you complete them. You'll be able to track your progress and milestones against the timeline you've set.
The checklist can include the following key areas:
A good post-transaction integration plan can include aspects such as:
We recommend working with industry-specific M&A experts to help you with the business sale, transition, and integration.
Our team at Exitwise can help you hire and work with wealth advisors, tax accountants, M&A attorneys, investment bankers, and business appraisers.
We'll listen to you, help you choose experts from our pre-vetted pool, interview and hire them, and negotiate fees. These experts will then advise you throughout the sale and integration process.
Besides helping you sell at the best price, the team will also help you understand and execute your role in the integration. Schedule a chat with our team today to see how our proven three-step process works.
Here are answers to questions you may have about the M&A integration process:
An M&A integration playbook is a roadmap or project management tool for the integration process, showing roles, tasks, best practices, and other crucial aspects.
The playbook may be physical or cloud-based, depending on the service provider.
Due diligence checklists, integration workflows, and post-integration checklists are some of the typical details in a playbook.
The typical M&A integration checklist includes the following:
Vertical integrations often lower the success rate of M&A deals because vertically integrated businesses can be difficult to manage.
These integrations are typically fewer because they lead to the loss of key talent, limited consumer options due to lower competition, and ruined reputations due to increased customer dissatisfaction.
Generally, CEOs and business owners refrain from merging vertically to preserve a legacy of plentiful consumer choices, retain key talent, and safeguard their reputation.
When cultures align, and cultural integration is easy, the new entity is more collaborative, innovative, and productive. The deal can then be said to be a success, even as you wait to achieve the hoped-for synergies.
The deal may fail altogether if cultures don't align and you can't reconcile them. You may note a lack of synergy realization, loss of key employees, employee resistance, and decreased customer satisfaction.
Several factors make an M&A integration successful.
These include careful early planning, selecting the right leaders, using technology, proactively executing the process, communicating well, and hiring external experts.
Talking of hiring external experts, working with the right team can increase your chances of a successful M&A integration.
You can count on us at Exitwise to help you find the most coveted M&A experts to help you sell and integrate successfully. Discover how our process works today!
Let Exitwise introduce, hire and manage the best, industry specialized, investment bankers, M&A attorneys, tax accountants and other M&A advisors to help you maximize the sale of your business.
