Post-merger integration

What is Post-merger integration?

One way how to increase competitiveness is to merge businesses into larger units based either on geographical location, or increasing production capacity, or a combination of production units in the value creation chain. This may happen through acquisitions, mergers or joint ventures. However, all these transactions will be successful only when all the processes of involved units will be integrated quickly into the new entity, and when under-utilised assets will be eliminated, thus creating synergies.

Why is Post-merger integration important?

Post-merger integration represents an opportunity for cost savings and for gaining a larger share of the market. The post-merger integration concerns resources, processes, policies and corporate cultures, and usually a larger number of employees who may feel jeopardised and tend to follow their old individual objectives. Integration may be used as an opportunity for the improvement of existing processes in all merged entities. Therefore, integration has to be managed as a project with well defined objectives, resources and deadlines.

What is the substance of an integration?

Integration concerns all that is a part of the company and its business. In particular:

- All the company's resources, not only in terms of tangible and intangible assets, but also employees and business partners;

- Internal processes, that have to be assessed in all units with the best solution being selected and implemented;

- Corporate policies. Typically, policies of the parent company are implemented without any further considerations. This may be an issue in cases when a foreign company acquires local business, and strictly insists on the application of policies that are very different from local culture;

- Corporate culture, the most difficult part of integration, that requires a great deal of sensitivity and patience.

The result of integration

Integration represents tens or even hundreds of specific steps, performed in an order depending on the content and deadline. These steps are usually presented as an analysis and a proposal of the to be solution. The result is a management decision on how the particular resource or system will be defined within the new company.

What benefits you can expect from Post-merger integration?
As was mentioned earlier, the pre-condition of a successful integration is its speed, however, this is not the only condition. Integration has to be performed in a consistent way, and management decisions have to be completed. Properly managed integration projects help to achieve these requirements.

Why engage a consultant?

Business integration is not a situation which mangers face often and thus may lack necessary experience in this matter. An external consultant may bring such experiences and thus will speed up this process and reduce related integration risk.

My own experience

- Negotiation and design of a joint venture with a large foreign company;

- Post-merger integration planning of an international corporation with two local businesses;

- Definition of requirements on a business partner in distribution services for a large international corporation.