Jam or Tuck? Managing a Successful Post-Acquisition Integration

A recent lunch meeting with a CEO who had just completed a significant M&A transaction highlighted to me the challenge of integrating two companies. Prior to embarking on the acquisition, this particular CEO had received advice to “jam” the new company in.  Conversely, some CEOs elect to “tuck” in their newly acquired company or simply count on their experience to figure it out as they go. Having been involved in many mergers and acquisitions myself, I believe there is widespread naiveté about the level of effort required to successfully combine two organizations.

According to the journal The Academy of Management Executive:  “In acquisitions that do fulfill their promise — that really make two and two equal five — leaders paid a great deal of attention to the integration process and, not surprisingly, involved people at all levels of the process.”

What are the secrets to a successful integration process?  In my experience there are some essential practices that increase the chance of a good outcome:

  1. Move quickly.  Speed is a critical element.  The longer the delay in completing the integration, the more resistance there will be.
  2. Assign an integration leader.  If you have experience with previous integrations, use an internal leader.  Otherwise, bring in an outside expert to capitalize on their knowledge.
  3. Establish an integration team.  Preferably composed of cross- functional members from both the acquiring and acquired organization.
  4. Define clear goals and success factors.  Then assess progress and report frequently.
  5. Communicate.  Develop a thorough communication plan from Day 1 that extends right through to the end of the integration process.

With increased M&A activity there is a growing body of experience among senior managers, however there still isn’t a widely understood operational model for integration.  Some large corporations whose core strategy is to grow through acquisition maintain full time teams dedicated to implementing integrations.  Unfortunately, most companies fail to apply the resources needed for a successful integration of an acquired company.  The result is usually one or two years of management challenges and lost synergies that could have been avoided.

If your strategic plan calls for growth through acquisition, it makes sense to start thinking beyond due diligence and past the transaction.  As part of your acquisition planning, invest the time and resources to successfully set up your organization for a prosperous integration.  The payback will be worth it!

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Colleen Kelley (VP Operations)
 

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