A Proven Framework for Post-Merger Integration

Mergers and acquisitions are vital to the growth of many businesses, yet roughly half of all M&As fail to create shareholder value. Why do so many deals—especially those that promise to offer substantial cost and revenue synergies—produce such disappointing results?

One major reason is that companies tend to treat post-merger integration (PMI) as a mechanical process that occurs after the deal is closed. In fact, it is the strategic and tactical choices made before the deal is legally completed—and often before the bid has even been made—that ultimately determine whether the integration will succeed or fail.

Also, PMIs are often treated as a one-size-fits-all process. Yet each PMI will have its own speed, style, focus, and rhythm. The PMI process must be tailored to account for those differences. As an example, a merger driven by cost synergies will require a very different strategy than one in which achieving revenue synergies is the main goal.

Despite the uniqueness of every PMI, there are 12 common rules that ensure organizations gain the value they expect from their M&A. These rules can be categorized into the three phases of every PMI.

The 12 Imperatives for Successful PMI

Set the direction

  1. Start by defining the basic objectives of the integration.
  2. Rigorously manage the integration as a discrete program, independent of its size.
  3. Organize integration teams around drivers of value and the target operating model, and appoint leaders from both companies.
  4. Insist on senior leadership that is committed, credible, and highly visible.

Capture the Value

  5. Emphasize speed. Use the period before closing to start designing the future company and prepare to capture value.
  6. Aggressively pursue synergies according to the integration's objectives.
  7. Keep the current business strong by involving current customers in the integration process.
  8. Decide on IT for the integrated company early and explicitly.

Build the Organization

  9. Design the future operating model early in the process; it may differ from the day-one structure.
  10. Manage talent by selecting, retaining, and developing the best people.
  11. Rigorously manage cultural integration and change management.
  12. Communicate, communicate, communicate; it is better to have too much communication than too little.

How to Support Value-Driven Post-Merger Integrations

Learn More About Successful PMIs

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