Post-merger Integration: And now the work begins

At a glance

• Define your strategic rationale. It will drive success
• Communicate your vision, often and consistently
• Never underestimate the importance of your people
• Outline your programme governance and reporting structure
• Be Agile. Even the best laid plans change

It is widely accepted that only one in two mergers/acquisitions succeed, suggesting a high failure rate. But at Mazars, we experience a different success rate.

That said, post-merger integration is a substantial transformation programme with multiple workstreams simultaneously feeding into the end point and shouldn’t be underestimated. When things go wrong they can do so at scale with the potential to wipe out not only the value of the deal, but also damage ‘business as usual’ in both the acquiring and acquired companies.

Even the most seasoned senior executives may have little first-hand experience of transformation projects, which is why it is advisable to seek expert advice well in advance of closing a deal. Typically, external as well as internal resource and expert guidance is required to ensure a smooth transition.

A dedicated integration team will be essential, but a balance must be sought between embedding the new acquisition and running the business. At Mazars, as experts in post-merger integration, we understand the amount of time and resources that is involved in successfully integrating a company. This understanding enables you to make the best use of your time across both priorities.

External advisers are not only hired for our technical expertise. At Mazars, we can also provide the extra resourcing that is inevitably required – despite good planning – for those unforeseen moments or where you are unable to re-allocate staff from critical BAU activities to the integration programme.

Helen Parker, Director, Management Consultancy, Mazars, says: I'm not always convinced that clients really see post-merger integration as the major transformation that it is. It sucks out so much management time and you’re going to need the most senior people from each department to drive the process forward.

People first, processes next

One of the biggest pitfalls in post-merger integration is forgetting to take the workforce on the transformation journey. Companies are made up of people and it is people who will ensure success.

One of the main challenges at the start is stabilising the business, creating an exciting future for staff and management in both the acquired business and the acquirer company, rather than uncertainty and conflict.

Agreeing operational structures pre-acquisition will ensure this happens. If possible, it’s helpful to ensure key staff know their position in the new business. If senior staff are on board with the strategic rationale, that feeling will spread to the wider teams, ensuring employee engagement in the post-integration period.

Ultimately, successful transformation is people-led. There must be robust mechanisms in place to win over hearts and minds. Being able to explain from the very start why you’ve bought a company, and really think about it from all the different perspectives is crucial, Parker says.

Open channels of communication

To avoid faltering momentum post-acquisition, it is vital to focus on information sharing. Ensuring you communicate clearly and timely at every stage of the process so that staff feel included and understand the reasons for the acquisition and the role that they will play both today, and going forward.

Crucially, defining, understanding, and communicating the strategic rationale for a business takeover will drive success. Clarity of that vision is essential. Without it, everything will fall away.

An abundance of communication channels are available today. Traditional approaches such as company-wide email messages and town hall-type gatherings remain effective and valid at different stages in the process.

Nowadays however, innovative technologies provide management with a broader array of communications tools that may suit a wider audience such as videos, short clips and remote panel sessions.

The type of language used is also an aspect to consider. Avoid technical jargon and overly corporate language. It can appear vague, complicated and runs the risk of alienating staff.

Parker says: Consider the different personas in the business and the transformation through a people experience lens. Sometimes management only try and tackle it from a technical point of view.

Structured processes

Once the strategic rationale is in place and you’ve won the hearts and mind of your people, management can begin to secure those early quick wins and realise the immediate value propositions. The integration team can then move onto synergies and ensure that the discoveries obtained through due diligence are folded into the 100-day plan. The plan doesn’t always have to fit into 100 days, but it is a helpful framework to use.

At Mazars, we manage post-integration through an Integration Management Office (IMO) or ‘control room’, made up of key staff and external advisers. From this structure, everything will flow in and out to ensure target setting, robust governance and timely reporting.

The integration team can then identify and build different work streams for each separate function and mobilise the people required to drive the transition. Ultimately, the process is about minimising disruption and ensuring the business runs as usual, so understanding the order in which you will achieve different stages is vital.

Parker says: Just before ‘day one’ you mobilise the workstreams. Define what the scope and journey is for each workstream and what the desired result is. It's crucial to spend the time before the deal closes to set a high-level plan of how you're going to achieve your vision. You always have to be adaptable as you don't have all of the information until the deal is concluded of course, our IMO approach has proven to hold such resilience.

Navigate change with confidence

Post-integration is no easy task but then securing greater value was never meant to be simple. Establishing a vision and achieving it through merger or acquisition is not for the faint-hearted, but with clear goals, expert advice and operational agility the business value that can be unlocked is substantial. Our experience, knowledge and expertise will ensure we will walk alongside you throughout your journey to achieve your vision.