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Mergers and acquisitions (M&As) are often seen as a quick way to reach growth and there is often impatience from both the owners and the board to see the expectations realized. But when we hurry, things are bound to go wrong. Perhaps the acquisition was made upon the heels of a large cash flow and a sudden opportunity; perhaps it was done as a defensive move to minimize the competitors’ possibilities to improve their positions. Many companies, however, devote much time to their acquisition strategies before it is time to carry out the actual transaction. Management consultants perform extensive market analyses and driving forces influencing the market are rigorously studied. The acquirer’s positioning is defined, the competition is analyzed, and other possible complementary acquisitions that would fit strategically are also thoroughly dissected. When it is finally time for the acquisition the board seeks the assistance of several experts for the transaction itself; auditors and corporate finance- and legal expertise. The whole acquisition process can end up costing the company a fortune.
According to our experts, it is during the integration that everything goes wrong. The most common mistake made by the board and management is that they overestimate their own ability to drive a complex integration. Even though the board and management are highly competent, they often lack experience in post-merger integration. They overestimate their long business acumen and underestimate the complexity that the leadership and project management demand during an integration.
Our 6 best advice for a successful Post-Merger-Integration
- Integration is a skill – a great CEO does not necessarily has to be an expert on post-merger integration. If in-house integration expertise is lacking – get external help directly.
- See things for what they are – understand the corporate culture and the business dynamics within the acquired company – first. Keep a clear head, it’s never as good as it looks, and it is never as bad as it seems.
- Create a common goal and plan – create a common goal. Establish an integration plan and create a post-merger office if necessary. Clarify responsibilities and take an active role in the post-merger work.
- Communication is key – do not underestimate the power of honest and clear communication both internally and externally. Set the pace of integration and if necessary, adjust the speed.
- Tackle the functional areas in the right order – secure that you understand in which order to address the functional areas. Avoid doing all at once and do not lose focus on the top line.
- Human Resources experience is crucial – let HR play an active role in the post-merger process. Be objective regarding your own and the other company’s competence.
Read the full PDF article here: Post-Merger tips – Nordic Interim