Mergers are inherently risky, but with the right strategies in place, companies can ensure a smooth transition and maximize their return on investment. While it may seem like negotiations are the hardest part of a merger, that’s nothing but a common misconception — the success of any merger rests on the post-merger integration techniques.
From starting early to guaranteeing transparent communication to aligning technological infrastructures, Will Rossetter explains that professionals offer countless tactics to help businesses seamlessly integrate following merger deals.
Beginning Integration Immediately Following Deal Announcement
Businesses can begin planning the process prior to the deal announcement. However, it all kicks off once the deal is announced to ensure proper integration.
Immediately following the deal announcement, companies should address the topics listed below:
- Deciding whether to employ the help of a consultant to help develop and execute the integration plan. When technical skill or bandwidth limitations are at play, this is a necessity.
- Outlining pre-close requirements and considerations, such as:
- Corporate document retention
- Financial operations
- Data room creation
- Management structure
- Technology
- Insurance coverage
- Sales and operational procedures
- Regulatory hurdles
- Customer retention
- Employee retention
- Property plant and equipment definitions
- Intellectual property
- Customizing a vision statement detailing how the deal boosts the company’s future goals and its potential for profit growths, alongside risks
Any major decisions should be made before the deal is announced. That way, companies can ensure key functions start immediately.
Planning for Transparent Communication
Experts recommend creating a communication plan for stakeholders of both companies, including clients, suppliers, regulatory organizations, and partners. The type of integration will determine whether other types of stakeholders need to be included, like investors, the public, and analysts.
Well-thought-out communication plans discuss artifacts like CEO emails, client emails, call scripts, press releases, and employee FAQs to cover all communication bases. Being proactive is the name of the game in order to stay ahead of the news curve. After all, there is rarely anything more damaging to integrations than dealing with leaks prior to official reports.
Entities have four primary options to choose from when constructing an integration communication team:
- They can utilize their own communication team, provided they have enough experience and resources.
- They can leverage the investor group’s communication resources.
- They can hire an external firm.
- They can use an external consulting firm that’s already supporting the rest of the integration.
Either way, the communication team must clearly express the deal’s risks and rewards, while answering questions from employees and shareholders.
Aligning Technology Infrastructures
Many elements within technology infrastructures are expensive (e.g., backup services, security services, mainframes, physical data centers, operating systems, etc.). That said, today’s commoditized nature of technology results in a far less complicated and more affordable implementation.
On top of that, mergers often induce infrastructure savings because entities can consolidate data centers, saving money while maintaining the best security protocols.
Even though many technological alignments are uncomplicated, some remain complex. As such, companies should enact an infrastructure alignment and consolidation plan that considers constraints and outlines how both businesses will integrate their technological solutions.
Conclusion
Effective post-merger integration is crucial for a successful transition. The above strategies emphasize the importance of early planning, transparent communication, and technological alignment. Initiating integration immediately after the deal announcement, establishing a thorough communication plan, and aligning technology infrastructures are pivotal steps in ensuring a seamless merger. By carefully addressing these key areas, companies can maximize the benefits of their merger and achieve long-term success in the integrated entity.