Post-merger integration

Overview

The process of combining two or more organizations into a single organization involves several organizational systems, such as assets, people, resources, tasks, and the supporting information technology. The process of combining these systems is known as 'integration'. Integration Planning is one of the most challenging areas to address pre-close during a merger or acquisition. Even though culture clash between companies can cause integration problems, only 4% of the executives in a survey by Pritchett, LP reported that their organizations include culture-specific questions in their due diligence checklists. Culture-specific due diligence may include cultural screening and creating a cultural profile of the target firm. GE Capital conducts a cultural assessment of prospective candidates against metrics such as trust in existing managers, language barriers, and operating processes to then facilitate a culture work out session between both sides.

An example of a typical structure for an integration consists of three layers: a steering committee, an integration management office (led by an integration manager) and a variety of additional teams organized by function (i.e. sales, human resources, finance, and information technology, etc.) and/or by business unit, product line, process, or geographic location.

More communication to employees is usually necessary during post merger integrations than during day-to-day operations. Fortunately, many of the questions from employees can be anticipated.

Achieving successes early in an integration can help build confidence in a deal and quiet skeptics.

Common problems that may be encountered during post merger integrations include resistance to change, divided loyalties, issues with employee trust in leaders, blurred roles and responsibilities, unclear reporting relationships, communication tangles, job insecurity, unusual employee turnover, and infighting. 

Organizational lifecycle

Integration fits within an organizational lifecycle or specific business mergers and acquisitions cycle where businesses buy, integrate, then dispose of businesses:

• Definition of vision & strategy
• Selection of growth method: organic vs inorganic
• Target identification
• Pre-deal evaluation & due diligence
• Negotiation & deal completion
• Post-merger integration
• Acquisition integration
• Ongoing improvement
• Disposal

References

References

1. Anthony F., Buono. (June 2019). ["The human side of mergers and acquisitions: Managing collisions between people, cultures, and organizations"](https://archive.org/details/humansideofmerge00buon}}{{pages needed). Jossey-Bass Publishers.
2. "Corporate Culture: The "X Factor" in Merger Success and Failure".
3. (December 2011). "A framework for the human resource role in managing culture in Mergers and Acquisitions". Human Resource Management.
4. "The 5 Critical Elements of an M&A Integration Plan".
5. "Top 10 Reasons Why More Employee Communication Is Necessary When Merging Companies".
6. "M&A Common Questions from Employees, Customers, and Media".
7. "Engineer Early Success in Your Merger".
8. (2018). "Smart Moves: A Crash Course on Merger Integration Management". Pritchett, LP.
9. (2020). "Merger-specific trust cues in the development of trust in new supervisors during an organizational merger: A naturally occurring quasi-experiment". The Leadership Quarterly.