A practical process of Post-Merger Integration (PMI)

For the growth of any business, it is imperative to have mergers and acquisitions. Unfortunately, due to improper process being following, most of these Mergers and Acquisitions (M&As) fail. Why does this happen? Why do deals, especially that one’s promising a huge amount of return and revenues are unable to provide productive output?

PMI is a process that takes place once the deal is finalized. Most companies don’t pay sufficient attention to this process. The strategy for PMI should be well thought out and crafted down to the tactical level even before the deal is legally completed. In fact, if a convincing PMI strategy cannot be finalized it is a clear sign that despite the best deal, the integration will fail.

PMI is not a generic process. The fact is, depending on the organizations involved, each PMI will have a tailored approach, schedule and strategy. It depends on the focus areas and goals of the deal. For example, if the goal of the deal is to achieve cost synergy it will lead to a strategy will be different to the strategy for a deal aimed at achieving revenue synergy.

While each PMI needs to have a tailed process, it is not totally random. There are 12 factors that need to be catered to by the organizations in order to maximize the ROI from their M&A. We can categorise these rules into the following phases.

1. Setting up the direction
2. Capturing the value
3. Building the organisation

Setup the direction

• Define the key outcomes to achieve via integration.
• Integration should be rigorously treated as an independent program tracked separately from other processes.
• Employees and leadership from both organizations should constitute the integration team.
• The senior leadership should be committed to actively participating.

Capture the value

• Focus on your speed. It is important that you close the current venture before designing the prospective company.
• Check and sign off on the synergies as per the integration’s objectives.
• Do not get weaker on the current business. You should have a strong hold on the current business. Involve current customers in the integration process.
• Decide on IT for the integrated company early and explicitly.

Build the organisation

• In the beginning only, design the future operating model.
• You can manage talent. Try to select, retain and develop the best pool.
• Manage cultural integration and change management
• Communication is the best way to grab everything you want. Therefore, communicate, communicate, and communicate.

Make right strategic decisions to empower the PMI. It will enable your companies in accelerating in the right direction and create value as rapidly as possible.