Our thoughts, views, and experiences
Post-Merger Integration Planning
Most deals look great on paper – openly supported by senior analysts who tout tremendous value, complementary offerings or services, and large synergies from combined organizations. These financial and strategic gains, however, rarely materialize as stated without a post-merger integration plan that outlines the strategies and tactics for seamless execution.
Post-merger integration planning ideally begins well in advance of the deal announcement, once serious negotiations begin. Doing so ensures that vetted detailed plans and approvals are in place to start executing on the day of announcement. The integration program office (initially a small team) also needs to be in place before the deal is announced.
The North Star Vision
The vision of successful integration, or as it is often called the exit plan, is the integration plan’s North Star. It guides all integration activities and measures progress throughout transition. It spells out what the finish line looks like to the leadership and integration teams and defines what needs to be completed for them to achieve their goals.
Examples of a successful integration include all employees successfully transitioned onto the same payroll and benefits systems, the use of a common email system, common integration supply chain distribution procedures or one procurement-to-payment process. These success vision outcomes should correlate to the statements of value of the deal.
Without a clearly defined North Star vision, the integration will quickly unravel. You may not see evidence of this immediately, but in time leaders will wonder why and how things could get so off-track. Leaders will notice that core business will start to take a hit with employees not staying focused on executing their roles. They'll also notice that culture and morale are suffering, which leads to your best and brightest walking out the door. Quickly, deal realization is in jeopardy.
Why Is a North Star Vision Important?
Often the CEO and other senior leaders have a limited view of the vision of successful integration. By the time the deal is announced the leadership team has been living this potential deal for a long period of time and their focus has already moved onto other priorities such as another deal or the latest business crisis. It is essential that the vision be defined by the top leadership. Also, they need to consistently, actively, and visibly support and monitor progress, and use it as a barometer that drives decision making throughout integration.
The day of deal announcement is just the beginning of post-merger integration, a starting point in a journey towards deal realization. Post-merger integration strategies and activities, guided by the deal’s North Star, manage the transition for internal and external stakeholders in both organizations, including employees at all levels, customers, suppliers, strategic partners, and shareholders.
It is possible to achieve the tremendous value and synergies from a deal, but it doesn’t just happen. Post-merger integration directed by a leader-defined North Star will help lead to successfully integrate businesses and deal realization. The vision for success is just the beginning, yet without it all other integration activities will suffer. Change and integration efforts are not easy endeavours, but with clear focus and active and visible leadership sponsors, the plan and deal value will be realized.