An M&A deal comes with a great amount of excitement and expectation for growth potential and profits.
However, after the deal is over, the real challenge of orchestrating a complete organization redesign begins. This is why, perhaps somewhat unsurprisingly, the majority of mergers and acquisitions never achieve desired synergies or performance value three years post-acquisition. A main reason is due to suboptimal operational integration. These challenges highlight the vital need to think holistically.
Before diving into the change management process post-merger, senior executives and the design team must create a blueprint to outline action. A well thought-out business integration strategy assists leaders in hitting their transformation targets and integration objectives.
How much change is required?
The first step is to identify how much change will have to happen, depending on the given circumstances. This allows you to identify potential challenges before they arise, giving a better idea of how to proceed in creating a strategy. Both the acquiring company and acquired company will ultimate need to undergo a certain level of change.
Tips for creating a seamless business integration strategy
Our experienced team of organization design consultants share some of their best advice for approaching integrations.
1. Mobilize all involved employees, not just leadership
Organizations don’t change, people do! Mergers and Integration are essentially about creation of additional value or, somehow improving efficiencies. The mistake that often happens is the business integration strategy is treated as a technical issue only. There can be no integration that improves performance unless the organization’s people are directly involved in the process. – Wilma Paxton Doherty, Senior Consultant
2. Focus on how people work together, not just what they do
When it comes to integration, companies need to focus on how people work together as much as they think about what tasks people do. An integration activity is really about building social capital together; we are integrating communities, not machines. – Dan Schmitz, Consultant
3. Involve both organizations in the design
The common mistake organizations make is approaching mergers as one side taking over the other. This is an unhelpful and unproductive mode of thinking. You need to involve both sides in the design of the new integrated structure. Don’t make the mistake of trying to ‘integrate’ one into the other. Remember, once the deal is done it’s about integration, not merger or acquisition. – Peter Turgoose, Senior Consultant
4. Start with a solid plan
Three actions to predict success with a business integration strategy are:
- Start fast and way upstream with assessing fit first.
- Set a clear integration strategy and outcomes.
- Ensure behavioral integration and change. Behavioral change is at the individual, group and organizational levels. Meanwhile, integration is as much about the social system as it is about the technical.
– Mark LaScola, Founder & Managing Principal
What comes next?
Successful mergers and acquisitions call for visionary leadership that marries a changing strategy, competitive difference, products and services, and customers into a business integration strategy. When done right, the implementation leads to new sources of value to validate the reasoning for the M&A. This payoff is invaluable.
OTM’s methodologies work to support your acquisition strategy, integration objectives or reaching your overall transformation target. Learn more about how our solutions can help facilitate your business integration.