From the perspective of the buyer, you have now acquired another company; now what? During the due diligence period, there was probably a discussion of what type of synergies or savings will result from the acquisition/merger. For instance, maybe there is no need to have duplicate back-office, and therefore, you are planning to eliminate a few positions. When should this be done? What happens with the workload that those people are currently doing? What happens if the buyer has a different ERP system than the seller? Post-merger integration planning ensures business success.
As you can imagine, all of these questions need to be answered in the form of a plan, precisely an Integration plan which involves a discovery phase, a detailed timetable, and an expected outcome or results. Typically, during the due diligence phase, the buyer is more focused on assessing the risk and on closing the deal than on integrating the company. Once the transaction is closed, the buyer’s focus is now 100% on integration (unless the decision is to operate the new company as a stand-alone company).
During the discovery phase, the original assumption of synergies is tested and further documented. Perhaps new synergies are identified during this process. The objective of this phase is to ensure that methods are modified to avoid negatively impacting the business.
For example, assume the collector position is set to be eliminated; this position has been handled by the same person for the past 15 years. It would be wise to transfer the function and the “institutional knowledge” with ample time to minimize any disruption to the collection efforts of the company.
After discovery, specific action plans or timetables are developed. During this phase, the integration team (comprised of resources from both companies) documents the sequence of events (e.g., Gantt chart) for the various integration items. For instance, if one company uses Quickbooks and the other company uses Netsuite for their accounting software, and the decision is to move from QB to Netsuite, a very detail plan is required to transition one company from one system to another.
Another approach to incorporate into the integration plan is to evaluate the necessary changes from a People – Process – Technology point of view. The goal is to assess what organizational structure, process, or technology changes are essential and to determine how to implement without jeopardizing customer and vendor relations.
Last but not least is the quantification of synergies (i.e., savings) that are expected from this acquisition/merger. Very often, the synergies identified during the due diligence phase are very high level and “pie in the sky” type of benefits. Many acquisitions that I’ve seen either fail to reach those goals or worst they never go back to see what they achieved or not (lack of accountability). This phase can be complicated because there are multiple timetables to consider, some savings have dependencies, some savings have aggressive growth assumptions, or learning curve assumptions.
Planning is the key to achieve the desired synergies when two companies come together; however, employee/customer/vendor communication is equally important and often underemphasized when planning post-merger integration.
