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Post-merger integration: strategies for effective tech, people and process alignment

Post-merger integration: strategies for effective tech, people and process alignment

Combining two businesses into one strong, cohesive entity is a long, intensive process, at least when it's handled correctly. While there may be some temptation to get the merger completed as quickly as possible, it's best to take a strategic and thought-out approach to combining people, processes and technology.

The key question to ask in post-merger integration is "Why." Why was the acquisition launched, and what business outcome is the organization aiming for? These early questions plant the seeds for integration planning and help the business stay focused on value creation throughout the process.

Companies that don't invest effort in post-merger integration can end up with wasteful operations, a divided workplace culture, and other lingering issues, weakening the combined business for years to come. While integration work is a challenge, it's one worth accepting.

What's the importance of post-merger integration?

Post-merger integration is a specialized set of practices and priorities that are called upon during very specific circumstances. It's worth noting that most companies lack preparation in this area and may underestimate just how demanding it will be to combine their operations with another business as part of a merger.

It's common for post-merger acquisition efforts to encounter various stumbling blocks for a variety of reasons, including:

These and other issues can lead to mistakes that may reverberate through a company's operations for years to come, and as such it's worth focusing on strong post-merger integration practices to keep the company on the right track.

Taking a strategic approach to post-merger integration allows companies to address the areas of people, processes and technology in an intelligent and planned way, rather than having to make important decisions on the fly.

The impact of solid post-merger integration can entail the following effects in each of those functional areas:

Such a strategic approach allows the combined business to make the most of all its resources. In some post-merger scenarios. Companies may feel forced into divestiture from projects, offices, key talent or whole departments that were generally healthy and could have led to value creation. When that occurs, it's often because there wasn't an adequate plan regarding how to use those components within the new structure.

Who is responsible for post-merger integration?

Even in the most tech-savvy organizations, the people working on a project have a greater impact than the digital tools or frameworks they use. In the case of post-merger integration, there should be a strong, high-ranking stakeholder calling the shots.

What makes an ideal leader for an M&A integration project? This person should be:

Appointing an integration team specifically to handle the execution of the integration plan isn't an unnecessary indulgence — it's simply the most direct way to give the process a chance to succeed. By giving these dedicated professionals the ability to establish a strategy and follow it through to completion, the business is showing its dedication to integration success.

How do you keep post-merger integration on track?

Taking a best-practices approach to post-merger integration is a wide-ranging concept that starts before the merger is finalized and extends for over a year as the two companies find the best use for their respective people, processes and technologies.

Specific practices to embrace include:

There is no one-size-fits-all approach to M&A management. Being too committed to a specific point of view when chasing cost savings — for example, laying off a whole team, closing a specific office or replacing an entire tech stack — can harm the combined entity's chances for integration success.

Having a strong and well-informed team handling the post-merger integration process allows the company to draw up a plan focused on value and business objectives and then follow through.

What are some specific approaches to post-merger integration?

One of the best ways to be effective at M&A activity is to run a business that is flexible and adaptable in its everyday operations. Organizations with a strong ability to manage change, integrate new systems and onboard employees are naturally prepared for the strain of post-merger integration.

Even the best-prepared organization, however, may benefit from working with outside experts to handle the specific stressors and requirements of the post-merger integration process. This is especially true when a merger brings the need to adopt entirely new working arrangements.

For instance, some companies have always operated from one office, only taking on distributed work models because of a merger. Managing this culture shock — and taking on the new practices needed to succeed — is a great case for engagement with an expert third party.

There are two major models for collaboration between these outside experts and a company's internal team:

No matter which group is in control of the post-merger integration process, a successful merger needs to ensure that the same internal staff members keep working on the project from pre-merger to completion. This continuity of personnel ensures knowledge retention.

Ready to commit to effective post-merger integration?

If you intend to engage in any kind of M&A transaction, it's worth planning out the operation in every detail. This planning should always come back to the "why" that motivated the purchase, and can inform all your objectives.

Working with Transcenda can empower you for successful integration, during and after the transaction is finalized. Our experts have a long history of working with companies of all sizes, across a range of industries. This experience has given the Transcenda team a strong list of best practices to draw on, as well as skills we can pass on to your team.

Want to see how Transcenda can assist with post-merger integration? Read our case studies or contact us today.

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