How the best acquirers excel at integration

Integrating merging companies requires a daunting degree of effort and coordination from across the newly combined organization. As the last step in an M&A process that has already been through many months of strategic planning, analysis, screening, and negotiation, integration is affected both by errors made in earlier stages and by the organizational, operational, finance, cultural-alignment, and change-management skills of executives from both companies. Those that do integration well, in our experience, deliver as much as 6 to 12 percentage points higher total returns to shareholders (TRS) than those that don’t.

The skills and capabilities that companies need to improve most when they integrate are persistent and, for many, familiar. Grounding an integration in the objectives of the deal, bringing together disparate cultures, setting the right performance goals, and attracting the best talent are frequently among the top challenges that bedevil even experienced active acquirers. 1 1. An annual barometer of more than 700 integration managers attending Conference Board’s Merger Integration Conference since 2010 identifies similar needs year after year. They’re also the ones that, according to our experience and survey research, 2 2. Rebecca Doherty, Spring Liu, and Andy West, “ How M&A practitioners enable their success ,” McKinsey on Finance , October 2015. The online Global M&A Capabilities survey was in the field from May 19 to May 29, 2015, and garnered 1,841 responses from C-level and senior executives representing the full range of regions, industries, company sizes, and functional specialties. differentiate strong performers from weaker ones. 3 3. “High performers” are defined as companies where respondents to the Global M&A Capabilities survey report that their companies have met or surpassed cost- and revenue-synergy targets in transactions (n = 464). “Low performers” are defined as companies where respondents report that their companies have achieved neither cost- nor revenue-synergy targets in transactions (n = 302).

Ground integration in the objectives of the deal

The integration of an acquired business should be explicitly tailored to support the objectives and sources of value that warranted the deal in the first place. It sounds intuitive, but we frequently encounter companies that, in their haste, turn to off-the-shelf plans and generic best practices that tend to overemphasize process and ignore the unique aspects of the deal.

Since the deal rationale is specific to each acquisition, so is the integration approach, and it’s important to think through the implications of the deal rationale and the sources of value for the focus, sequence, and pace of the integration. Consider, for example, the experience of two companies where R&D was a primary source of value for an acquisition. After prefacing their integration plans with a close review of their respective objectives, they each took a different approach to integration.

For the first, a technology company, the objectives of its deal were to build on the acquired company’s R&D capabilities and launch a new sales channel in an adjacent market. Extrapolating from those objectives, the integration managers designed the integration around three core teams for R&D, sales, and back-office consolidation. By prioritizing these areas and structuring groups to tackle each one, the company ensured the proper allocation of talent, time, and management attention. Specifically, steering-committee time was regularly dedicated to these issues and ensured a proper focus on the areas likely to create the most value. As a result, the team quickly launched cross-selling opportunities to similar customers of the acquired company and deployed resources to accelerate ongoing development and merge R&D road maps.

The deal objectives also shaped the sequence and pace of the integration. On a function-by-function basis, managers determined where to accelerate, stage, or delay integration activities, by considering which created the most value while sustaining the momentum of the integration. Hence the company prioritized must-have functional areas to ensure compliance and business continuity—for example, ensuring that the finance group was ready to support month-end close procedures—and accelerated value-creating activities in sales and R&D. Year-on-year revenues were up well over 10 percent as of the last quarter for which figures were available.

In the second company, a key player in the pharmaceutical industry, R&D again was a primary source of value. But because the acquired biopharmaceutical business was in an emerging area that required different capabilities and entrepreneurial thinking, the acquiring company’s managers decided that the acquisition’s culture and processes would be a critical aspect of its value. While they would reevaluate whether to integrate more fully once products cleared development and were ready for market, they decided that it would be best in the short term to integrate only select back-office functions to take advantage of the combined company’s scale. They would ensure the proper linkages with legal, regulatory, and financial-compliance activities, but to protect the target’s business momentum, the acquiring company’s managers allowed the target’s managers to retain their local decision rights. The acquirer also provided resources, such as capital, to help the business grow—and rotated managers into the business to learn more about it and its market.

Tackle the culture conundrum

Culture isn’t about comparing the mission and vision of two companies—which on the surface can often appear very similar. And culture is much deeper than a good first impression, a sense that you share the same values, or the more trivial practices of, say, wearing (or not wearing) jeans on Fridays. Instead, the essence of culture is reflected in a company’s management practices, the day-to-day working norms of how it gets work done—such as whether decisions are made via consensus or by the most senior accountable executive. If not properly addressed, challenges in cultural integration can and often do lead to frustration among employees, reducing productivity and increasing the risk that key talent will depart, hampering the success of the integration.

Companies often struggle to assess and manage culture and organizational compatibility because managers focus on the wrong things. Too often, they revert to rites, rituals, language, norms, and artifacts—addressing the most visible expressions of culture rather than the underlying management practices and working norms. Managers often return from initial deal interactions convinced that the cultures of the companies involved are similar and will be easy to combine. 4 4. Oliver Engert, Neel Gandhi, William Schaninger, and Jocelyn So, “ Assessing cultural compatibility: A McKinsey perspective on getting practical about culture in M&A ” (PDF–1.10MB), Perspectives on merger integration , June 2010. As a result, they almost always apply too few resources to the cultural side of the integration, often leaving it to human resources to lead.

For cultural integration to be successful, employees must view it as core to the business. That may not happen if business leaders are not visibly leading and prioritizing the cultural integration. Culture is also difficult to address because it permeates an organization—spanning levels, geographies, and organizations. Therefore, addressing it just at headquarters or a few key sites is insufficient; real cultural integration needs to be addressed in a distributed fashion across geographies and at all levels in the company. It should also be treated seriously at all stages of the acquisition process: due diligence, pre-close integration planning, post-close integration, and ongoing operations.

For example, in one healthcare deal, the acquirer began its assessment of culture during the due-diligence process. Managers took an outside-in look at the likely culture of the target company and used this input to shape the initial approach to due diligence, top-management meetings, and initial integration planning. They even used the insights for more tactical decisions, such as limiting how many people attended initial meetings. Specifically, rather than bringing dozens of finance professionals to assess synergies, the company started with a smaller group to understand the target better. Then, at the integration kickoff, they built in an explicit discussion of working norms, so integration leaders could begin identifying, understanding, and addressing some of the differences head-on.

Maintaining the momentum of cultural integration well into the integration process is equally important. In an integration of two European industrial companies, managers identified and evaluated ten potential cultural goals as joint areas for improvement, joint areas of strength, or areas of difference. The managers weighed these potential goals against the sources of value in the deal, deciding to focus on four that were most closely linked to this value and that struck a balance between areas where the two companies were similar, as well as areas where they were different. Quickly achieving the benefits of their similarities created the momentum and trust required for addressing many of the thornier issues the managers faced. To ensure that cultural integration would be linked to and led by the businesses, not just by human resources, the company assigned a senior-executive sponsor from each business to tackle each goal. Every sponsor then created and implemented a plan that managers could monitor well past the close date and into ongoing operations—including specific consistent metrics, such as achieving a certain score on an ongoing employee survey.

Translate sources of value into quantifiable performance goals

The results of our global M&A-capabilities survey suggest that companies are significantly better at identifying sources of value than they are at translating those sources of value into quantifiable performance goals (Exhibit 1). The explanation is intuitive: understanding the theory behind how two companies can come together and brainstorming revenue-synergy opportunities are exciting, but operationalizing the ideas is more complicated.

Companies find this work to be challenging. The value-creation process requires setting a granular baseline; setting targets; putting together detailed, milestone-driven plans; making tough decisions and trade-offs; and visibly tracking progress over time. The first step alone is daunting, since setting an objective baseline requires an apples-to-apples comparison of each company’s costs and revenues, and that means preparing financials in a way that’s usually foreign to both the acquiring and the target company.

One best practice we observe is that managers, before setting detailed performance goals (and the actions to achieve them), update expectations on synergies after the due-diligence phase by looking more broadly at capital productivity, revenue enhancement, and cost efficiency, as well as transformational opportunities. By this point, the acquirer will know a lot more about the target than it did during due diligence and may even have a different purpose and mind-set. In fact, in our experience, the best acquirers revisit value creation in a very formal way several times during the integration, both encouraging and resetting the expected synergy results to higher and higher levels.

To do so, managers at one industrial company brought key employees from both sides of the deal together in separate cost and revenue value-creation summits, where they were tasked with identifying bottom-up opportunities to meet the aspirational goals that had been set top-down. These summits were staggered, with costs coming first, followed by several rounds on revenues. The first summit, held before the deal closed, focused on only headquarters costs—the most immediate cost synergy of the deal. During the summit, the participants—a mix of subject-matter experts, finance specialists, and members of the core value-creation integration team—brainstormed ideas and crafted initiatives to achieve performance goals endorsed by the CEO. Managers later held revenue value-creation summits in the countries with the greatest opportunities, holding each country leader accountable for regional targets. By creating a space away from the day-to-day business to brainstorm ideas, summit managers set a tone that encouraged collaboration and promoted creative thinking. Coming out of the summits, managers understood who had accountability for which targets and initiatives, and how progress against targets would be visible to the most senior executives of the company.

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Compared with other stages of M&A, integration is where companies perceive their capacities and capabilities to be the most deficient. Survey respondents were 12 to 18 percent less likely to report that their companies had the right capacities for integration than for any other M&A activity, and were 12 to 19 percent less likely to report that they had the right capabilities. This is probably because integrations require so many people with such diverse capabilities for a substantial period of time. Most companies have at least a few leaders who fit the bill, but some companies find it difficult to task enough people for an integration. That makes it challenging to build the right integration team with top-notch players—though this is one area where high-performing companies across the board distinguish themselves. Overall, respondents at 76 percent of high performers surveyed report that they staff an integration with people who have the right skills, versus 46 percent of respondents at low performers. The contrast is even starker in staffing different aspects of the integration with the right talent (Exhibit 2).

From a CEO’s point of view, it can initially appear risky to move a top performer out of the day-to-day business and into integration. In some cases, key business leaders should be kept running the business, but in others, there is an opportunity for companies to backfill the position and move a high performer into integration. If it’s not a hard personnel decision, it’s probably not the right one. There are instances where we see companies do this well. In one retailer, a top-performing business-unit head was assigned to lead the integration full-time. In a medical-device company, a celebrated COO was relieved of his day-to-day duties and appointed lead manager of integration.

Moreover, uncertainty about the career implications for employees can make it difficult to attract the right talent, since employees may be hesitant to move into an integration role they see as a temporary gig. To address this, managers of one global diversified food company assigned a midlevel manager to run a multibillion-dollar integration, hoping it would prove his potential to be a business-unit leader. Eighteen months later, they elevated him to the leadership of a business unit. The visible career trajectory of this individual helped elevate the perception of integration roles for subsequent acquisitions. Integration is increasingly perceived as a career accelerator, which is attracting more talent within the organization to integration. In another example, a major technology company takes this even further and makes rotations through material integrations a prerequisite to becoming a company officer.

High-performing acquirers understand the complexity and importance of getting all aspects of integration right. Companies that apply best practices tailored to deal objectives have the best chance of delivering on the full potential of the deal.

Rebecca Doherty is a principal in McKinsey’s San Francisco office,  Oliver Engert is a director in the New York office, and Andy West is a director in the Boston office.

The authors wish to thank Brian Dinneen and Kameron Kordestani for their contributions to this article.

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M&A integration strategy is crucial for deal success but remains difficult

25 September, 2020

acquisition integration plan

PwC’s 2020 M&A Integration Survey

Capturing sustained value from M&A is elusive even in a thriving economy. During the current global pandemic and economic recession, acquirers must renew and increase their focus on ensuring that deals deliver the expected value. Buyers that fail to successfully integrate companies quickly and efficiently will struggle, especially in a slow economic recovery.

But for many acquirers, M&A integration remains a challenge. It’s a highly tactical effort that requires large-scale, enterprise-wide coordination of activities on a scale most companies haven’t experienced. The process is often considered 20% strategy and 80% execution, but the 80% relies heavily on the 20%, and a well-thought-out integration strategy is critical for setting the course to capture deal value.

In PwC’s 2020 M&A Integration Survey , 62% of executives said their companies had an integration strategy in place when they signed their largest recent deal. But a large majority also said integrating key areas still was difficult, and less than 20% of respondents reported significant strategic, operational and financial success.

A successful integration strategy involves looking across the entirety of both companies involved in a deal and converting the acquisition strategy into specific strategies for all areas of the organization. In this sense, there’s no one-size-fits-all for each part of the new enterprise or even for each deal. The degree of speed, consolidation and other aspects of an integration strategy can and often does vary, and some areas may not be integrated at all.

Integration often varies by deal type

Planning the degree of M&A integration across functions and geographies and tailoring it for the type of acquisition is critical to translating acquisition strategy into integration strategy. Deals come in all forms, but there are four main types:

  • Stand-alone deals involve acquiring companies that are complementary to an organization but could disrupt business if they’re integrated into the parent company. A typical integration strategy is to gain control of the cash and leave all operations separate. There may be additional reporting requirements for financial statements provided to the parent company.
  • Tuck-in deals involve acquiring smaller companies — often to gain access to key products, technologies or talent — that can essentially be “plugged into” an existing enterprise and leverage its size and scale to expand market opportunities. These usually are full integrations, with a strategy that quickly integrates employees and data.
  • Absorption deals involve acquiring companies in the same industry or with similar products or services, with the goal of achieving significant synergies. That usually requires full integration, and the larger size of these deals often means integrating different areas at different speeds.
  • Transformational deals involve acquiring new markets, channels, products or operations in a way that fundamentally changes the combined organization. These transactions require a high degree of collaboration and alignment between the companies on integration strategy to achieve deal objectives. This especially is the case if the acquisition is in a different sector.

When developing integration strategies, executives need to consider the specific deal type and translate the strategy for that acquisition into specific integration strategies across both enterprises.

Integration strategy considerations and the target operating model

Developing integration strategies requires balancing multiple factors, impacts and trade-offs. In addition to the critical question of how value will be captured, companies should ask the following:

  • How much control will the buyer want to have over the seller?
  • How similar and different are the business models, products and market offerings?
  • How much could integration disrupt normal business operation?
  • How will the integration impact employees and culture?
  • How are customer relationships managed between the two organizations?
  • How are new products created and taken to market?
  • How important are synergies — both cost synergies and revenue synergies — and where will they come from?

The integration strategy is important for setting the direction of a target operating model, and 59% of executives surveyed said their companies had a model in place by the time the deal was signed. An effective operating model should include eight critical components that are aligned with the acquisition and integration strategy and centrally managed at the executive level. Even then, operating models can take years to fully mature and be realized. Acquirers today are increasingly tasked with rapidly developing a model at the outset, but they also should be agile and able to adjust the operating model throughout the integration.

Executing a successful integration strategy

A well-defined M&A integration strategy must be developed for each function and geography across the entire enterprise. It requires careful consideration of the deal strategy and overall deal value to be achieved, especially as new drivers continue reshaping M&A during and after the COVID-19 pandemic and recession.

One last element to consider is who executes the strategy. Yes, entire companies — from top executives to frontline workers — often are involved in integration in some way. But successful integration requires dedicated oversight throughout the entire process. Without it, various teams are at greater risk of being in the weeds on specific, individual actions instead of actions more likely to create shareholder value and result in sustainable returns.

A key to success is establishing an integration management office and empowering a dedicated integration leader. The integration leader should be someone who understands the business strategy, deal objectives, and the current operations and operating model. A senior person with deals experience can be the tip of the spear for the overall integration and manage all stakeholders and competing priorities. Yet the survey found that among companies with a cross-functional change management program, less than one-third had an integration leader as the primary sponsor.

The successful output of the integration strategy should culminate in a set of guiding principles that enable individual teams to develop their specific functional integration plans. Creating continuity from acquisition to integration, with coordination across the combined enterprise, will provide a path to turning anticipated deal value into reality.

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Merger Integration

Step 10: Execute Acquisition Integration Plans (Includes Day 1 Plans)

Post-acquisition integration.

An acquisition integration is the consolidation of all or some of the acquired organization into the acquirer's business. While the integration may be a collaborative, team effort with the acquired organization, the acquirer typically has the final say on decisions.

A  post-acquisition integration strategy defines an integration’s goals, priorities, assumptions, measures, non-negotiables, and the extent and timing of the integration of an acquired organization. Before close and pivoting to the execution of the integration, an acquirer should have clearly defined the integration strategy and at a minimum, developed Day 1 and Day 30 detailed plans. Timely implementation is predicated on being ready to roll on day 1.

In-depth planning prior to close creates the momentum to integrate and increases the odds an acquirer will cover a lot of ground at a fast clip in the first 100 days.

In this step, we provide acquisition integration best practices, playbooks, articles, and presentations that will help you:

  • Execute your post-acquisition integration plans expeditiously
  • Communicate effectively to stakeholders on Day 1 and thereafter
  • Achieve early wins

Plus, we offer tools that will help you track:

  • Results against plans
  • Synergies and milestones achieved to date
  • Activities to be completed
  • Unresolved issues

We also cover how to close out your Integration Management Office and transition any remaining long tail integration activities to business line leaders.

Acquisition Integration Best Practices

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10. Don’t jump in front of a bullet. A lot of hours, energy, and effort have probably gone into making your merger happen. Going forward, chances are good you won’t be able to reverse any of senior management’s decisions. Therefore, think twice before you voice any emotionally-charged negative opinions.  Bad mouthing the merger holds little promise of changing anything and it can be harmful to your career ... 

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A Slow-Paced M&A Integration is a High-Risk Strategy

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A lengthy, slowly paced integration is a high-risk strategy …  

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If you have a reliable frame of reference, you can put things into perspective.  Knowing what’s “normal,” you’ll have a better feel for how you should react to the particular situation facing you.  So let’s look at the typical scenario.

We’re dealing in generalities here, but the breakout usually goes about like this.

Some 20 percent of the people in the acquired company are “merger-friendly.”  They’re clear advocates who willingly embrace the combination.  You can depend on them to help drive the program.  Another 50 percent of the folks sit on the fence.  They assume a so-called neutral position, trying to figure out which way to lean.  They’re not necessarily hostile to the merger, but they’re not helping like they should.  The remaining 30 percent are the resisters.  They’re …  

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1. EXPLAIN THE REASONS FOR THE CHANGE.

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Perhaps the most effective way to minimize resistance is to make sure people in the organization have a good understanding of the rationale for the changes ...

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SUBJECT: Acquisition

Today marks a historic and exciting milestone for all of us: the transaction to combine the Acquirer and Acquired Co. is complete. Together, we will form a stronger business, drive further growth and innovation, and create more value for our employees, customers and stakeholders.

Acquirer and Acquired Co. have been on parallel tracks to ...

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TO: Acquired Co. and Acquirer Employees

Today, we have completed the acquisition of Acquired Co. We have the unique opportunity to build upon our complementary portfolio, strong businesses, recognized brands and quality products to become one of the leading companies in our industry. To our newest employees, let me be the first to welcome you to Acquirer...

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Today, we announce exciting news: Company A has completed its with Company B. This is an important day for our organization and one that ensures we remain a highly competitive global company.

We plan to quickly integrate the company and finalize the corporate organization structure within the next 90 days. The success of our integration effort will be driven by how effectively our employees work together to deliver value to our customers and results to our bottom line ...

How to communicate mergers or acquisitions to your customers

How to Communicate Mergers or Acquisitions to Your Customers

Examples of communications to customers from three different acquirers and deals.

Excerpt from first example:

T4 has recently announced its agreement to purchase OCN to become one of the foremost business service providers in North America. This provides our customers the opportunity to access an enhanced service portfolio over a larger geographic area.  T4 is and will remain committed to supporting our customers’ mission critical requirements ... 

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We have announced exciting news: Acquirer and Acquired Co. have completed the transaction to merge our operations.

This is a game-changing combination which will provide us with the scale, geographic reach, and capabilities to solidify our position as a leading provider of materials in our industry. Going forward, you will receive even more value from our products:

  • We will have a greater portfolio of quality products and a family of brands as well as increased capabilities to innovate superior products and systems 
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Dear Customer,

Today, we announce exciting news: Company A has completed its acquisition of Company B. This combination creates an organization even better able to serve customers and compete in the global marketplace.

Our new name is Company AB and our company's website is now CompanyAB.com. The name change symbolizes our intention to broader our business platform and deliver more value to our customers.

We know our success is dependent on your success, and we are excited about what the new Company AB has to offer:

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Excerpt from Supplier FAQs

  •  What is the purpose for Global Procurement? To provide the largest volume opportunity for our supplier business partners.  We believe that with larger volumes the supply base’s manufacturing cost will be lower , thereby reducing our cost.  
  •  What are the short and long-term implications? Short Term - We will be focused on reducing our supply base to maximize the volume for selected suppliers. Longer Term -  We will work to integrate more with our smaller supply base, and to learn how to combine our resources with those of our suppliers.  This will include logistics ...

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Dear Valued Supplier,

Today, we announce exciting news: Company A has completed its acquisition of (merger with) Company B. This combination creates an organization even better able to serve customers and compete in the global marketplace.

Our new name is Company AB and our company's website is now CompanyAB.com. The name change symbolizes our intention to broaden our business platform and deliver more value to our customers.

We are excited about what the new Company AB has to offer: . . .

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Answers to Employee Post-Merger Integration Questions

Answers to 43 common frequently asked questions by employees on the front-end of an post-merger integration.

  • Will offices or other facilities be closed? For the time being there will be no changes and we will continue to go to market as we have in the past. We will begin immediately to get to know each other and develop plans to combine our businesses in the most effective way ...

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Excerpt from answers to employees faqs.

  • Is the purchase/sale of Acquiree to Acquirer finalized? Yes. The U.S. Department of Justice (DOJ) and Acquirer have entered into an agreement which permitted the acquisition to proceed. The Acquirer and Acquiree have both received Board and Shareholder approval and we have officially closed the deal.  
  • What Acquiree offices are included in the sale? All Acquiree’s operations in North America, Europe, and Asia are included in the deal..

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When and What to Communicate to Employees in a Merger and Acquisition

Upon announcement, let employees clearly know:

  • The reasons behind the combination
  • Specifics of the agreement
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Talking Points for Executives at Employee Meetings Answers to Employee FAQs

Excerpt from Talking Points for Executives at Employee Meetings

  • Welcome everyone! It’s a pleasure to meet with you today. We’ve invited you here to celebrate the announcement of our acquisition by a highly regarded, successful private equity firm,____________.  
  • Our acquirer provides management and oversight for the multiple businesses in their portfolio, which will soon include our company.  
  • I’d like to remind you that the deal has only been announced. It has not closed. We anticipate closing the deal by year-end, but it’s not final yet. We’ll let you know as soon as the contract is signed.  
  • We’re keeping our company name and brand. Our sterling reputation for quality products and excellent service will help us retain existing customers and acquire new ones.

HR M&A Communication Employee Meetings: Announcement Day One

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Critical communication meetings with employees occur:

1.    Announcement Day 2.    Close Day 3.    After Close–Benefits Briefing

These meetings are prime opportunities to inform people, engage them in the transition process …   

Information Technology: Day 1 Answers to Frequently Asked Questions

Information Technology: Day 1 Answers to Frequently Asked Questions

Most IT processes and procedures will remain unchanged on Day 1. Acquired Co. and Acquirer’s IT teams will be working closely together over the next several months to bring our IT systems together in the way that best suits the needs of the business. In the meantime, review the FAQs below to learn more about the IT transition and what it means for you. For even more information, check out the FAQ on Integration Central at http://www.ourcompany.com/integration ...

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Today, marks the beginning of our new organization. This Day 1 Onboarding Guide is designed to help you understand changes that are taking place (or will take place) and any actions you may need to take.

The purpose of this guide is to explain:

  • What you need to know now (Now: this week)
  • What you'll need to know and do in the very near future
  • When other changes will take place and when you can expect to hear more about them

You will continue to do your job the same way you did before close. As we continue to integrate our organizations, we will inform you of changes, and if your assistance is needed. This guide covers company-wide information. Your manager will cover information specific to your function.

Day 1 Compensation and Benefits Cover

Day 1 Compensation and Benefits

  • Impact on Your Job
  • Our Commitment to You …
  • Transition Road Map
  • Transition Events Schedule
  • Important Compensation and Benefit Reminders
  • Acquirer Compensation Adjustments
  • Compensation - Exempt Employees
  • Compensation - Office Hourly Employees
  • Compensation - Field Hourly Employees
  • Acquired Co. Services Benefit Offerings
  • Benefits Overview
  • For More Information

Post Merger Integration Compensation, Benefits, and Policy Changes

Post-Merger Integration Compensation, Benefits, and Policy Changes

Acquiree's Pre-Merger Compensation and Benefits Plan and the Acquirer's Post-Merger Changes in 40 Areas:

  • Salary Plans
  • Incentive Plans (Cash)
  • Restricted Stock
  • Exempt Overtime
  • Overtime Meals
  • Call-Out Pay
  • Shift Differential
  • Cafeteria Plan ...

Communication of New Benefits Plan Post-Acquisition

Communication of New Benefits Plan Post-Acquisition

  • Communication of New Benefits Plan 
  • Talking Points
  • Assumptions
  • Timeline for Communicating Benefits Program

Employee Briefing

Employee Briefing on Acquisition

Why Acquired Co. Market Strength / The People Combined Strength Acquired Co. Overview  Strategy for The Future North America Opportunities for Employees Merger Timeline More Information What Has Been Determined Thus Far Summary

M&A Day 1Employee Onboarding Plan

M&A Day 1 Employee Onboarding Plan

What to Avoid in Employee Orientations

  • A tedious data dump 
  • Boring presenters
  • Executives who do “touch-n-go’s” or “flyovers” without any real engagement
  • Dumbed-down orientations for employees (separate from managers) …

Sample Merger Announcement to Employees on What's Changing

Sample Merger Announcement to Employees on What’s Changing

  • Information Technology
  • Employee Directory: All Acquired Co. employees will be added to Acquirer Employee Directory
  • New intranet site for Acquired Co. employees will be accessible 
  • Day 1 Email, Phones, Applications, …

Information Technology Help Desk: Key M&A Integration Tasks

Information Technology Help Desk: Key M&A Integration Tasks

  • Incoming call & ticket support will stay “as is” on Day 1.
  • Both Help Desk teams know who to contact if users request access to resources. Acquirer’s 
  • Intranet site will have a “cube” with the Acquired Co. support phone number and when clicked, will email the Acquired Co. Help Desk …

Engineer Early Success in Your Merger

Engineer Early Success in Your Merger

Every merger, once announced, is immediately put on trial. Top management—those who crafted the deal—also stand accused. And the accusers just keep crawling out of the woodwork as several months go by …

Due First 30 Days By Work Stream

Due First 30 Days By Work Stream

Work Streams

Finance Information Technology Legal Human Resources East Operations West Operations Corporate

Post Merger Integration First 30 Days Checklist

Post Merger Integration First 30 Days Checklist

Workstreams include Information Technology, Corporate Finance, Communications, Human Resources, Environmental, Safety, R&D, Procurement, and Business Units

Information Technology:

  • Develop high-level working assumptions on scope if Acquired Co. moves to SAP
  • Prepare rough order of magnitude cost estimate
  • Create Functionality Matrix showing all ERP instances and what modules and functionality are used
  • Determine initial working assumptions on ERP rollout options 
  • Complete organization design
  • Determine standard desktop and laptop models
  • Determine patch management, asset management, and software deployment tools ... 

M&A Integration Review 60 Days Post-Close

M&A Integration Review 60 Days Post-Close

  • Merger Integration Report Card – 1st 60 Days
  • Survey – Concerns Raised
  • Next 60 Days: Integration Challenges
  • Recommendations from Managers
  • Executive Dilemmas
  • The Tough Questions
  • Recommendations for Next 90 Days

Acquisition Integration Update For Employees 60 Days Post Close

Acquisition Integration Update For Employees 60 Days Post Close

Executive Summary Integration Status Acquisition Synergies Operating Expense Reductions Guiding Principles

M&A Integration Status Report: First 90 Days

M&A Integration Status Report: First 90 Days

Status of Integration Initiatives First 90 Day - Initiatives Status Summary Finance Human Resources Information Technology Legal Corporate East Operations West Operations Real Estate

Day 90 M&A Integration Review

Day 90 M&A Integration Review

Methodology

  • All Team Leads were interviewed; answers were aggregated and kept anonymous 
  • Output was organized by topic into recap slides for each question 
  • Questions were centered on broader “Newco” topics …

Integration Update 90-Days Post-Close from CEO

Post-Merger Integration Update from CEO

First page of 3-page merger integration update.

From: CEO To: Employees

It’s now been three months since we combined our companies. I’d like to explain what integration challenges lie ahead and how you can continue to help.

First, I thank you all for your cooperation and hard work. Integrating two companies is tough and I recognize that many of you have put in a lot of additional effort to help the two companies begin operating as one. I thank everyone for their patience ...

Sample Letter: Employee Communications During M&A

Sample Letter: Employee Communication During M&A

What Our Company Needs from You

  • Continue to be patient and understanding as we push through some of the tough integration challenges related to the core parts of our business …  

Activities by Work Stream

180 Day Post-Merger Integration Plan at 90 Days Post Close

Human Resources: Compensation

  • Plan for mid-transition hires
  • Communicating changes to salary grade and/or pay adjustments
  • Exec Comp:  SC compensation changes in System
  • All pay changes effective April in System

Post-Merger Integration at 100 Days: The Customer Tolerance Point

Post-Merger Integration at 100 Days: The Customer Tolerance Point

HP-Compaq used a M&A integration approach called “Adopt and Go” for making decisions regarding internal processes and IT systems. Rather than debating for months about whose processes were best, they simply agreed on one and went with it …  

Post-Acquisition Customer Survey

Post-Acquisition Customer Survey

About 100 days after Close, it’s a good idea to take the temperature of the two companies’ customers. Chances are they may have experienced some turbulence caused by the transition …  

Is Culture Clash Really The Cause Of Your Post-Merger Integration Problems?

Is Culture Clash Really The Cause Of Your Post-Merger Integration Problems?

Corporate culture often catches the blame when the post-merger integration process runs into trouble. But mergers produce an array of organizational problems that have nothing to do with culture conflict per se ...

Status of Post-Merger Integration Guiding Principles

Status of Post-Merger Integration Guiding Principles

Status of Integration Guiding Principles 

Live our values — no compromise People think that overall the leadership teams are exhibiting values

Work together — no “us and them” Still "pockets" of dominant Target and Acquirer groups

Act with urgency — make decisions quickly Still major concerns around the day-to-day decisions are too slow…

Post-Merger Termination and Survivor Meetings

Post-Merger Termination and Survivor Meetings

  • Communications for April/May
  • Termination Impact Matrix
  • Business Rationale for Termination Actions
  • WARN Act (Worker Adjustment & Retraining Notification Act) – Fresno only
  • Previous Severance Packages
  • Current Severance Packages
  • Termination/Survivor Meetings by Site
  • Email Invitations to Meetings
  • Support Materials for Conducting Termination/Survivor Meetings
  • Separation Package Contents
  • Site Meetings to Follow Earnings Call
  • Script for Conducting “Keepers” Meeting

Manage Employee Turnover After an Acquisition

Manage Employee Turnover After An Acquisition

A direct by-product of the acquisition integration process is an increase in employee turnover. It’s a fact of life that, whether planned or not, there will be attrition …  

Information Technology Merger Integration Progress

Information Technology Merger Integration Progress

IT Integration Standardization Phase IT phases,  IT Integration Process Enablement Phase Progress - Task Group IT Integration Phases IT Integration Punch List Overall Progress

Post Merger Integration Major Initiatives by Work Stream

Post Merger Integration Major Initiatives by Work Stream

Human Resources Communications Culture Finance and Accounting Legal

Post-Merger Integration Steps on Timeline

Post-Merger Integration Steps on Timeline

Integration Steps

  • Analysis and Initial Plans
  • Design New Organizational Plans
  • Implementation Planning
  • Implementation
  • All Steps by Month

After the Merger: Managing the Shockwaves

After the Merger: Managing the Shockwaves

After the Merger: Managing the Shockwaves,  3 rd  Edition

Author: Price Pritchett, Ph.D.

Named “one of the best business books of the year” by  Library Journal .

After the Merger  provides a clear look at the tasks and problems of post-merger integration. It is first book ever written on merger integration strategy.

This hardbound volume provides a level of detail that will help your team navigate the many potential pitfalls of the integration process.  After the Merger  is packed with proven strategies that allow you to turn the instability created by a merger or acquisition to your advantage.

Specific topics explored include:

  • 6 errors that managers make again and again—and how you can avoid them
  • Best practices for handling the 4 major categories of a merger—everything from “rescue” to “raid”
  • Ways to defuse cultural time bombs that can destroy mergers
  • Separate checklists for managers in both the acquiring and target companies
  • Time-saving checklists for executives on both sides
  • Importance of conducting a disciplined Merger Talent Audit

Playbooks cover image

Acquistion Integration Tools

M&A Synergy Best Practices

M&A Synergy Best Practices

M&A realization best practice tips

  • Assign synergies to accountable owners and then hold them to a plan 
  • Follow up on agreements on planned measurement approaches and their timing 
  • Ensure initiatives are supported and linked to integration related projects 
  • Manage cross-functionally to ensure costs are not simply shifted to other parts of the business …

Strategic Score of Each Integration Initiative

Strategic Score of Each Integration Initiative

A strategic score is assigned to each of 144 workstream initiatives in a cross-border acquisition integration.

Columns on Excel spreadsheet for each Initiative:

Work Stream, Responsible, Execution by Day 1, Urgency: Hi/Medium/Low, Impact: Hi/Medium/Low, Strategic Score, Ranking in Original Top 10, End State, Impacted Countries, Project Structure, Led By Accountable, Reporting to IMO 

M&A Synergy and Cost Estimates

M&A Synergy and Cost Savings Report Templates

Excel spreadsheets to track synergy estimates categorized as labor and non-labor, required and discretionary (strategic vs. nonstrategic).

M&A Cost Synergies Report

M&A Cost Synergies Report

M&A Cost Synergies Excel Template plus Example of Completed Template

Instructions for Cost Synergy Template       

1) Log each integration activity that increases or decreases headcount and/or expenses with projected time frames.   

2) Use "Assumptions and Notes" to describe each integration activity in more detail.

3) Notes regarding general accounting treatment:

  • Severance for reductions in Acquiree positions are generally capitalized as part of the purchase price (if the reduction is made within one year).
  • Severance for reductions in Acquirer positions are expensed when employees are notified.
  • Stay bonuses are expensed over the period teammate is required to work.
  • Costs related to Acquiree facilities that will no longer be utilized are generally capitalized as part of the purchase price (if the move is made within one year).
  • Costs related to Acquirer facilities are expensed.
  • Potential sub-lease income offsets costs recorded ...

Integration Dependency Form and Dependency Log

Integration Dependency Form and Dependency Log

Dependencies mandate tasks be executed in a specific sequence. They should be rigorously tracked because they can help you:

  • Determine the right order of activities in the M&A integration.
  • Calculate the critical path of the integration
  • Identify resource and scheduling issues 
  • Identify opportunities to accelerate the schedule

Integration Issues Risk Form and Risk Log

Integration Risk Form and Risk Log

A risk is an event that has not happened while an issue is something that has happened. 

As you identify each risk, determine which integration team member will be responsible for tracking and reporting it. The owner of the risk is responsible for implementing a plan to resolve a risk if it becomes an issue.

Prioritize your integration risks based on the likelihood that they will occur and the severity of the problem if they do occur.

Integration Issues Form and Issues Log

Integration Issue Form and Issue Log

Issues are problems, gaps, inconsistencies, or conflicts that occur during the an M&A integration. Issues can include problems with the employees, technology, shortages, or any other problem that has a negative impact.  If issues remain unresolved, the integration may suffer delays and overruns. Each issue should be monitored and assigned an owner.

Company Merger Letter to Customers

Company Merger Letter to Customers

We are delighted to inform you that our company is merging with Dodson, Inc., a leader in our industry. There will be minimal disruptions to our business due to the change in ownership. Our leadership team, our headquarters, and our products will remain the same. That means no interruptions in service to you.

Our new owner has the funding to grow our business in a way that will help us realize our full potential and serve you even better in the future ...

M&A Integration Weekly Status report

When and What to Report for a Post-Merger Integration

What do you report? Each team member will provide the following to the M&A Task Force leader: Key Actions/Accomplishments During the Past Week, Key Issues/Decisions Required, Potential Solutions/Help Needed, Next Steps/Actions

How is it reported? Task Force Leaders compile the individual team member reports into a team report and submit it weekly to the IMO. Alternatively, Task Force Leaders may bring the team's report to a regularly scheduled IMO meeting and review the report with the IMO and other Task Force Leaders ... 

Post Merger Integration Scorecard

M&A Integration Scorecard Template

Excel Spreadsheets

10 Instructions

  • The latest version of the Integration Scorecard/Milestones will be sent to you via email each Monday. This version will reflect all updates reported through 5:00 pm (Central) the previous Friday.
  • Send all weekly updates to Bill Smith at [email protected]
  • Make your updates directly to the latest version of the Scorecard/Milestones ...

Merger Integration Synergy Report Template

M&A Synergy Plan Template

Synergy types include Headcount, Operations, Sales Procurement , R&D Cost Savings, Pricing Rationalization, Procurement, and Cross Selling.

Steering Committee Post-Merger Integration Dashboard

Steering Committee Post-Merger Integration Dashboard

The steps to create an integration scorecard and the categories to cover, plus an example

Post-Merger Integration Dashboard

Post-Merger Integration Dashboard

Post-merger integration status reported by these departments: .

  • Corporate Business Development
  • Corporate Communications
  • Tax Products
  • Customer Support
  • Human Resources
  • Commercial Applications
  • Product Management
  • Sales and Alliances

synergy template

M&A Synergy Template

The M&A Synergy Template captures synergy description, timing, assumptions, risks, cost to achieve, optimistic, conservative, and most likely synergy projections plus actual net synergies achieved.

Estimated Synergies

Estimated M&A Synergies Report

Report template includes conservative, optimistic, and most likely synergy estimates plus their basis for calculation, underlying assumptions, and time frame.

Post Acquisition Integration Process: The End-State Transition

Post-Acquisition Integration Process: The End-State Transition

How to hand off remaining activities:

  • Document deadlines and deliverables associated with the remaining open items
  • Provide access to all documentation on the project
  • Provide a list of all contacts and stakeholders involved in the project
  • Provide a full understanding of what has to be done, by when, and by whom.
  • Make sure people have an understanding of the negative implications if the remaining tasks get delayed

What Is an M&A Integration End State? When and How Should Teams Hand Off Remaining Activities?

What Is an M&A Integration End State? When and How Should Teams Hand Off Remaining Activities?

Every integration needs to have an end. Managing the End-State Transition can be just as important as managing the rest of the integration.

What is End-State?

The point in the integration when:

  • The bulk of planned integration activities have already been accomplished
  • The IMO processes can be ramped down and dedicated IMO personnel scaled back or redeployed
  • The remaining open integration workstreams and issues can be transitioned to a normal operation’s function

IMAGES

  1. M&A Integration: Post-Merger Integration Process Guide (2021)

    acquisition integration plan

  2. M&A Integration: Post-Merger Integration Process Guide

    acquisition integration plan

  3. Acquisition Integration Plan Template New Mergers and Acquisitions

    acquisition integration plan

  4. Integration Planning for an Acquisition

    acquisition integration plan

  5. Acquisition Integration and Consolidation

    acquisition integration plan

  6. Acquisition Integration Plan Template New Merger Integration Work

    acquisition integration plan

VIDEO

  1. Integration Strategies

  2. COT-Based Video Lesson for BUSINESS ENTERPRISE SIMULATION Topic: Identifying Business Opportunity

COMMENTS

  1. How the best acquirers excel at integration

    It should also be treated seriously at all stages of the acquisition process: due diligence, pre-close integration planning, post-close integration, and ongoing operations. For example, in one healthcare deal, the acquirer began its assessment of culture during the due-diligence process.

  2. 7 Elements Needed For A Successful Acquisition Integration

    7 Elements Needed For A Successful Acquisition Integration 1. Early Preparation. The best time to start developing a post-acquisition integration process is when the acquiring... 2. Cultural Alignment. Every company has its own culture. Challenging the acquired company’s culture generates... 3. ...

  3. The 10 steps to successful M&A integration

    Successful integration—the key to avoiding the risks of a merger or acquisition and to realizing its potential value—is always a challenge. And it is complicated by the simple fact that no two deals should be integrated in the same way, with the same priorities, or under exactly the same timetable.

  4. M&A integration strategy is crucial for deal success but remains

    A successful integration strategy involves looking across the entirety of both companies involved in a deal and converting the acquisition strategy into specific strategies for all areas of the organization. In this sense, there’s no one-size-fits-all for each part of the new enterprise or even for each deal.

  5. Post Acquisition Integration

    An acquisition integration is the consolidation of all or some of the acquired organization into the acquirer's business. While the integration may be a collaborative, team effort with the acquired organization, the acquirer typically has the final say on decisions.