During M&A, integration is one of the most crucial steps. However it has also proved to be the most difficult. A recent study found that M&A firms are between 12 and 18% less likely to believe that they have the capabilities and capacities for integration than other stages of M&A.
A key to overcoming this challenge is clear communication of the deal rationale and integration strategies. This will ensure that everyone understands what they are expected to do and how M&A will benefit their organization.
It is also crucial to use best practice tailored to the objectives of the deal. It is essential to use the same people who did the due diligence on the M&A deal for the post-merger implementation. This ensures continuity and helps avoid duplicate efforts.
Another challenge is merger acquisition integration keeping momentum during the process of integration. It is imperative that the team integrating the companies without sacrificing growth. Furthermore, this requires a solid understanding of the M&A company’s operations, so that the team in charge of integration can make decisions that are least disruptive to day-to-day activities.
A solid governance structure is essential to capture synergies and track them. This means establishing the M&A leadership group (which includes representatives from both organizations) and then the implementation of an integration plan, and establishing clear lines of accountability. M&As that integrate these best practices will yield as high as 6 to 12 percentage points higher total returns to shareholders than those that don’t.
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