The integration principles are the key fundamentals that underpin the integration and ensure the alignment of senior management in both the acquirer and the acquired business. However, companies tend to inadequately define the integration principles, change them often, or – even worse stay misaligned. By not establishing a clear set of integration principles, companies cause confusion in the merging organizations by tolerating unnecessary ambiguity and complexity in the integration approach.
Develop integration principles that guide the integration program
- Vision and strategic rationale for the deal (important to reiterate frequently throughout the integration program)
- The key integration objectives and the metrics necessary to measure success
- Sources and drivers of value creation (e.g. high-level revenue and cost synergies)
- Degree of integration and scope per functional area (i.e. a high-level view of the speed and depth of integration per organizational area – for example for IT the principle could be that basic infrastructure will be integrated, front-end applications will be assessed case-by-case
- Integration timeline and milestones
As mentioned, a common pitfall with integration principles is the failure to ensure full management alignment. Therefore, it is crucial that the integration principles are in harmony with the vision and deal rationale that has been agreed by the entire top team. Having aligned on the principles, they should be meticulously communicated within the integrating organizations in order to provide a crystal clear view of the strategy to be employed in the integration phase.
Establishing clear integration principles is a key part of integration planning and a strong support in dealing with integration complexity. When there are a number of different stakeholders, each with their own agendas, challenges will come up in every integration – but the establishment of a clear set of principles early on will help to guide the participants through the process, as the integration team can always come back to the principles agreed.