Flevy Management Insights Q&A
What are the best practices for integrating acquired companies during a restructuring phase?


This article provides a detailed response to: What are the best practices for integrating acquired companies during a restructuring phase? For a comprehensive understanding of Restructuring, we also include relevant case studies for further reading and links to Restructuring best practice resources.

TLDR Successful integration of acquired companies during restructuring demands thorough Strategic Planning, Cultural Integration, and Systems and Processes alignment, guided by best practices like due diligence, communication, and Operational Excellence.

Reading time: 4 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Strategic Planning and Due Diligence mean?
What does Cultural Integration and Communication mean?
What does Systems and Processes Integration mean?


Integrating acquired companies during a restructuring phase is a complex and critical process that requires meticulous planning and execution. It involves blending different cultures, systems, and processes into a cohesive unit that aligns with the strategic goals of the acquiring organization. Best practices in this area are continually evolving, informed by the successes and failures of countless mergers and acquisitions (M&As) across various industries.

Strategic Planning and Due Diligence

Strategic Planning is the cornerstone of successful integration. This phase involves defining clear objectives for the acquisition, understanding how it fits into the overall corporate strategy, and identifying potential synergies. According to McKinsey, companies that engage in thorough due diligence and strategic planning before the deal is finalized are 1.6 times more likely to report success in the acquisition. Due diligence should cover not only financial aspects but also cultural, operational, and technological compatibility between the organizations. This comprehensive approach helps in identifying potential integration challenges and opportunities early in the process.

Effective Strategic Planning also involves setting realistic expectations and timelines for the integration process. It's crucial to communicate these expectations to stakeholders in both organizations to ensure alignment. Additionally, establishing a clear governance structure for the integration process, with defined roles and responsibilities, is essential for maintaining oversight and accountability.

One real-world example of successful Strategic Planning and Due Diligence is the acquisition of Pixar by Disney in 2006. Disney took great care to preserve Pixar's creative culture while integrating it into Disney's broader operations. This careful planning and respect for cultural differences have made the acquisition a landmark success in the entertainment industry.

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Cultural Integration and Communication

Cultural integration is often cited as one of the most challenging aspects of M&A. A study by Deloitte highlighted that cultural issues are the reason for 30% of failed integrations. To address this, organizations must prioritize understanding and bridging cultural differences between the acquiring and acquired entities. This involves not only recognizing and respecting the existing organizational cultures but also actively working to create a new, shared culture that incorporates the strengths of both. Leadership plays a critical role in this process, setting the tone for an inclusive culture that values diversity and collaboration.

Communication is another critical element of successful integration. Transparent, consistent, and open communication channels must be established to keep all employees informed and engaged throughout the integration process. This includes regular updates on integration progress, changes, and how they will affect the employees. Providing forums for feedback and questions can also help in addressing concerns and reducing resistance to change.

A notable example of effective Cultural Integration and Communication is the merger between Daimler-Benz and Chrysler. Despite initial challenges, the companies focused on fostering a new corporate culture that leveraged the strengths of both organizations. This effort was supported by extensive communication initiatives aimed at building a unified workforce.

Systems and Processes Integration

Integrating systems and processes is another critical aspect of successful M&A. This involves harmonizing IT systems, operational processes, and business practices across the combined entity. According to Accenture, organizations that effectively integrate their IT systems within the first year of acquisition are more likely to achieve their expected synergies and performance targets. A systematic approach to IT integration, focusing on both technical and functional aspects, ensures that the combined organization can operate efficiently and effectively.

Operational Excellence in process integration is also crucial. This involves identifying and implementing the best practices from both organizations to create optimized workflows and processes. It's important to involve employees from both organizations in this process, as they can provide valuable insights into the strengths and weaknesses of existing processes. Additionally, leveraging technology, such as ERP systems and automation tools, can facilitate smoother integration and improve operational efficiency.

An example of successful Systems and Processes Integration is the merger of Kraft and Heinz. The combined entity focused on integrating their supply chain and manufacturing processes, leveraging technology to achieve efficiencies and cost savings. This focus on Operational Excellence has been a key factor in the merger's success, driving significant improvements in the company's performance.

In summary, integrating acquired companies during a restructuring phase is a multifaceted process that requires careful Strategic Planning, attention to Cultural Integration, and meticulous integration of Systems and Processes. By following these best practices, organizations can increase their chances of successful integration, achieving the desired synergies and strategic objectives of the acquisition.

Best Practices in Restructuring

Here are best practices relevant to Restructuring from the Flevy Marketplace. View all our Restructuring materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Restructuring

Restructuring Case Studies

For a practical understanding of Restructuring, take a look at these case studies.

Operational Excellence in Healthcare: A Restructuring Strategy for Regional Hospitals

Scenario: A regional hospital is undergoing restructuring to address a 20% increase in patient wait times and a 15% decrease in patient satisfaction scores, with the goal of achieving operational excellence in healthcare.

Read Full Case Study

Cloud Integration Strategy for IT Services Firm in North America

Scenario: A prominent IT services firm based in North America is at a crucial juncture requiring a strategic reorganization to address its stagnating growth and declining market share.

Read Full Case Study

Turnaround Strategy for Telecom Operator in Competitive Landscape

Scenario: The organization, a regional telecom operator, is facing declining market share and profitability in an increasingly saturated and competitive environment.

Read Full Case Study

Organizational Restructuring for a Global Technology Firm

Scenario: A global technology company has faced a period of rapid growth and expansion over the past five years, now employing tens of thousands of people across multiple continents.

Read Full Case Study

Restructuring and Transformation Initiative for a High-Tech Electronics Manufacturer

Scenario: A multinational electronics manufacturer is grappling with declining profits, market share, and productivity due to outdated operational structures and processes.

Read Full Case Study

Telecom Firm Reorganization for Market Leadership in Broadband Services

Scenario: The organization is a prominent broadband services provider in the telecom sector facing market saturation and increased competition.

Read Full Case Study

Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

How is the rise of remote and hybrid work models impacting reorganization strategies?
The rise of remote and hybrid work models is reshaping reorganization strategies, necessitating changes in Organizational Structures, Talent Management, and Operational Efficiency and Innovation, guided by insights from leading consulting firms and market research. [Read full explanation]
How do you measure the success of a turnaround strategy, and what key performance indicators (KPIs) should companies focus on?
Success of a turnaround strategy is gauged through Financial, Operational, and Market-Driven KPIs like Revenue Growth, Profit Margins, Cash Flow, Inventory Turnover, Customer Satisfaction, and Market Share, aligning with strategic goals for sustainable growth. [Read full explanation]
What are the implications of insolvency proceedings on a company's operational continuity?
Insolvency proceedings disrupt an organization's Operational Continuity, necessitating shifts in Strategic Planning, impacting Stakeholder Relationships, and requiring comprehensive Operational and Financial Restructuring to mitigate negative effects and potentially emerge stronger. [Read full explanation]
What impact do emerging technologies like AI and blockchain have on the efficiency and effectiveness of turnaround strategies?
Emerging technologies such as AI and Blockchain significantly enhance Turnaround Strategies by improving efficiency, effectiveness, and stakeholder trust, fundamentally changing corporate restructuring. [Read full explanation]
In what ways can artificial intelligence and machine learning be leveraged to streamline the reorganization process?
AI and ML can revolutionize business reorganization by enhancing decision-making with predictive analytics, streamlining processes through automation, and facilitating employee engagement and change management, thereby making reorganizations more efficient, data-driven, and adaptable. [Read full explanation]
How can companies ensure that reorganization efforts align with long-term sustainability goals?
Discover how Strategic Planning, Change Management, and Culture ensure reorganization aligns with Sustainability Goals, boosting resilience and competitiveness. [Read full explanation]

Source: Executive Q&A: Restructuring Questions, Flevy Management Insights, 2024


Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.