Integration is a critical stage in M&A. It has also proved to be the most difficult. A recent survey revealed that M&A firms are between 12 and 18% less likely to believe that they have the right capabilities and capacities to integrate than any other stage of M&A.
The key to overcoming this problem is clear communication of the deal rationale and the integration tactics. This will ensure that everyone knows what is expected of them and how the M&A can bring value to the company.
It is also important to implement best practices that are tailored to the goals of the deal. It is essential to utilize the same team of professionals who conducted the due diligence on the M&A deal for the post-merger implementation. This ensures continuity and avoids duplication of effort.
Another issue is maintaining momentum during the process of integration. It is essential that the integration team fuse the companies without sacrificing growth. Additionally, this requires a thorough understanding of the M&A company’s operations, so that the team involved in the integration can make decisions that are least disruptive to day-to-day activities.
It is also necessary to have a strong integration governance structure to track and recognize synergies. This includes forming an M&A leadership team (which should include both organizations’ representatives) and establishing and setting up a strategy for integration, and providing clear accountability. M&As that integrate these best practices deliver as much as 6 to 12 percentage points higher returns to shareholders than those that do not.