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How to Achieve GREATER VALUE in M&A? Do the Fundamentals of Post-merger Integration

Editor's Note: Take a look at our featured best practice, Post Merger Integration (PMI) Best Practice Framework (28-slide PowerPoint presentation). This document provides a guide and framework for best practice in post merger integration. Post merger integration is the process of combining two separate companies in a way that quickly creates the most value and fulfils the expectations outlined in the acquisition vision. The framework [read more]

Also, if you are interested in becoming an expert on Post-merger Integration (PMI), take a look at Flevy's Post-merger Integration (PMI) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

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Going into a Merger and Acquisition (M&A) is never an easy task. The process of M&A is like trying to complete a large puzzle when your right hand and your left hand have never worked together. In fact, Mergers and Acquisitions revolve around a plethora of moving parts. Going into this direction can be complicated. Suddenly, there are two companies and additional stakeholders that now need to fairly and seamlessly work and communicate together in order to bring the deal to completion.

But what happens after the deal has seemingly crossed the finish line. When this happens, there is the Post Merger Integration or M&A Integration. After the financial transaction, Post-merger Integration (PMI) is the process of bringing 2 or more companies together with the aim of maximizing synergies to ensure that the deal lives up to its predicted value. However, easy as it may seem, there are problems in Mergers and Acquisitions that can often cause deals to fail. Companies do not want a deal that only looks good on paper or results in a semi-integrated company.

To be able to live up to predicted value, a Post-merger Integration Planning must start right at the beginning of the deal.

Understanding Post-merger Integration

Post-merger Integration (PMI) or M&A Integration is the process of bringing 2 or more companies together.
It is what happens after the deal has crossed the finish line. In the PMI, our objective is to maximize synergies to ensure that the deal lives up to its predicted value.

In starting the PMI, Post-merger Planning should be done at the beginning of the deal and must be established before the deal closes. Any problems that may arise in Mergers and Acquisitions must be dealt with immediately since failure to properly address them can cause deals to fail or unable to extract true value from deals.

The 4 Types of Post Acquisition Integration

It helps a lot if we have a good understanding of the different types of Post Acquisition Integration to better manage deals.

Understanding the different types of Post Acquisition Integration will give the organization a better idea of what direction to take when it comes to Mergers and Acquisitions. It is best for companies to have a good hold of where they want to go and want to achieve taking into consideration current conditions and business considerations. When these are all laid out, greater are the chances that the right type of Post Acquisition Integration is undertaken and a successful Business Transformation is achieved.

Taking the Right Step Forward to Mergers and Acquisitions

Taking the road to Mergers and Acquisitions requires organizations to keep away from common mistakes. This is possible with the use of M&A Integrated Solutions.

The use of M&A Integrated Solutions and Post-merger Integration Tool allows organizations to increase the chance of a successful Post-merger Integration. With the use of these tools, users are enabled to plan properly from day one and the very beginning of the diligence process. Teams have access to all files and data prior to the deal closing to spot areas of concern and plan accordingly. Further, users can set cross-stream dependencies across multiple functions.

With M&A Integrated Solutions, it facilitates the use of a better process that maximizes deal value. Organizations just need to have a good understanding of the Post-merger (M & A) Integration Process to get the greatest value and achieve operational excellence.

Interested in gaining more understanding of Post-merger Integration? You can learn more and download an editable PowerPoint about Post-merger Integration (PMI) Primer here on the Flevy documents marketplace.

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157-slide PowerPoint presentation
The invaluable insights presented in this comprehensive PowerPoint deck are the culmination of the vast expertise and experience of over 30 former senior management consultants from renowned firms such as BCG, McKinsey, Bain, Accenture, and Deloitte. With a collective background in tier 1 [read more]

Want to Achieve Excellence in Post-merger Integration (PMI)?

Gain the knowledge and develop the expertise to become an expert in Post-merger Integration (PMI). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

M&A is an extremely common strategy for growth. M&A transactions always look great on paper. This is why the buyer typically pays a 10-35% premium over the of the target company's market value.

However, when it comes time for the Post-merger Integration (PMI), are we really able to capture the expected value? Studies show only 20% of organizations capture projected revenue synergies and only 40% capture cost synergies. Not to mention, the PMI process is typically very painful, drawn out, and politically charged, often resulting in the loss of key personnel.

Learn about our Post-merger Integration (PMI) Best Practice Frameworks here.

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Post-merger Integration (PMI) is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size fits all approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the [read more]


 
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About Joseph Robinson

Joseph Robinson is the Vice President of Strategy at Flevy. Flevy is the marketplace for best practices in business management. Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. The documents at Flevy (https://flevy.com) are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience. Flevy covers 200+ management topics, ranging from Digital Transformation to Growth Strategy to Lean Management. You can peruse a full list of management topics available on Flevy here. Prior to Flevy, Joseph worked as an Associate at BCG and holds an MBA from the Sloan School of Management at MIT. You can connect with Joseph on LinkedIn here.

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