Battling integration challenges

Mergers and acquisitions are rarely straightforward, and each case has its own unique characteristics. No matter how well-positioned for integration two companies may appear to be in theory, significant challenges may occur. Most integration studies indicate that only a fraction of buyers actually manage to increase value from the acquisition.

IMO

So what are the cornerstones of a successful integration?

Firstly, the due diligence and planning need to be done carefully and optimistically, but also realistically. In this phase it is of utmost importance to be clear and open about what the merger is trying to achieve. We have witnessed organizations getting sidetracked onto interesting, but irrelevant aspects. This must be avoided, the focus must be kept firmly on the strategic targets. Occasionally this means admitting that a deal does not offer the synergies and added value that was expected. Admitting this after months of hectic due diligence work can be frustrating, but sometimes absolutely necessary.

Secondly, a well-planned integration needs to be implemented efficiently. Keeping the set deadlines and filling in the necessary documents in good time for the IMO (Integration Management Office) might seem unnecessary and even painful at times, but the first 100 days of the integration often define the long-term success. In our experience, failures here will snowball into different parts of the organization and can affect momentum, if people start to lose faith in the success of the planned deal.

Finally, HR and cultural aspects need to be given sufficient attention. This is especially important in industries where much of the value depends on the knowhow and experience of the staff involved. A significant amount, if not all, of the synergies may be compromised if key personnel are lost during the process. The initial scrutiny, to determine whether the cultural fit is good, must be done carefully. But of equal importance – after the decision to go ahead with the planning is made – is ensuring that the relevant tools and processes to commit the staff are properly and fully implemented. Cultural aspects are complicated and somewhat dependent on people’s subjective views, and this I believe sometimes leads to shortcutting a thorough cultural DD and analysis.

Setting up an experienced IMO will be crucial

Setting up a separate IMO function will help in coordinating and organizing the overall process more efficiently. The IMO will help the team to keep its focus and deadlines, will ensure that the right tools and processes are implemented, and ideally will even be able to maintain a good team spirit and trigger a momentum that will push through the entire process. But there is more to the IMO than just project management.

Our involvement in large integration processes has taught us that experience is key in leading the IMO – experience gained not only from previous IMO projects, but from knowhow of the M&A process and from successful management of other enterprise-wide transformations. Such combined experience is what we believe will enable a successful IMO, and which in turn will assist in successful integration.

Suvi Unkuri works as an assistant manager in the KPMG Global Strategy Group. She has 8+ years of experience in management consulting, including market entry strategies/market analyses, commercial due diligence work, and integration PMO engagements. In her spare time she enjoys participating in various sports, reading, and honing her knitting skills.