Merger and Acquisition Integrations
Mergers and acquisitions are a powerful business tool that can create exponential value and growth. A well timed merger or acquisition can have significant impact on the competitive strength of an organization if the integration portion can meet the goals and time-line set by the board’s business drivers. Metagyre’s integration project leadership can ensure your company’s success.
Experience matters. It can be difficult to imagine all the different tasks required to effectively integrate IT systems, business workflows, assets and people. In simple terms, you want to size up the organization in front of you, choose the appropriate integration approach, prioritize your plan and manage the integration tasks across all the business and technical departments.
This means selecting the correct approach, building in feedback loops and refining the details around how best to bring everything together. Initially, you will choose between a shared services, complete integration or a hands off approach depending on the component and the business drivers of the merger or acquisition.
Trap to avoid. As you develop your integration strategy we recommend avoiding one very dangerous integration trap, the “best of breed” approach. Best of bread appeals intellectually and can easily seduce individuals into believing its lies. In this approach, teams evaluate both organizations’ systems, determine which is the best and migrate into the winner. In theory, this approach allows organizations to take full advantage of the best IT and business system components of either environment. In practice, this turns out to be as misguided as paying back all technical debt during a data center migration. The high cost in time, money and added complexity in the best of breed approach far out-strips any actual benefits received.
Remain nimble. Integration projects are, the “changing a flat tire while driving the car” project everyone fears. Merger and acquisition integration projects need adaptability and short feedback loops, making them ideal candidates for using an agile method such as Metagyre’s Results Oriented Project Execution (ROPE) framework. An agile methodology will allow you to continually test and refine assumptions (change the tire) as you implement short-term changes designed for immediate financial impact while also working toward longer term component integrations.
Challenges and Risks. There are several key risks that most merger and acquisition integration projects face. These risks include:
- Loss of customers, order volume or business reputation
- Logistical breakdown of shipping, receiving or manufacturing
- Loss of key personnel
- Missed saving or growth projections
- High anxiety inside and outside of the companies
These risks must be considered carefully and a plan developed to avoid or mitigate their impact. Recognizing the signs and understanding the levers to pull that can influence them is critical to managing integration risks.
When a company undertakes a merger or acquisition, it is sending a strong signal. The execution of the integration project must be equally strong.