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I’m curious about the common factors that impact whether a post merger integration project finishes on time and on budget. For those of you who have finished integration work on time, what do you attribute your success to? For those who have seen integration work run over on time and/or money, what was the reason? In my experience, IT system integration timeline and costs are chronically underestimated and undervalued, causing delays in finishing the integration period.
Much of the integration can be done on time, but IT challenges can be considerable. I agree that that is the area that tends to have the most deviation from the plan.
The majority of the integration can be completed on schedule, but there may be significant difficulties with the IT. funny shooter 2
While I have no experience with M&A, I’d think a thorough DD coupled with a sound integration plan is key to a successful PMI. Adding some buffer time to account for any surprises or skeletons in the closet should also help with setting reasonable integration timelines. And last but not the least, assembling a good team possessing strong analytical, operational and communication skills (not necessarily in that order) is also crucial to ensuring a successful and timely execution of the integration.
I fully agree with you on the difficulties on the IT integration. I managed one M&A project, and did not conduct the pure IT DD, taking for granted (by the related management) that it would be not complicated and should not be hectic to manage the integration. However, it turned out after the deal that we needed more resources for the integration.
The organizational culture of the target company is often ignored and it may harm the integration process as cultural shocks can depress the employees.
Critical, in my opinion, are top to bottom and reverse, through the line and across, single belief, unwavering commitment and unshakable unity to complete integration on time and budget. In summary, it ultimately comes down, or up, to all the people involved and therefore leadership, inclusion, camaraderie, participation, openness and selflessness are absolutely crucial elements. It’s the people that maketh the company before, during and post merger integration and long after that and they too can be the ones to cause its downfall or demise
I’ve found that it is easier to complete integrations on time and in budget when there is minimal impact to your existing business. It is far more difficult to properly estimate and plan when you have a great deal of overlap and integration work. In my experience, the times we were introducing a new line of business with minimal initial impact to existing business we had far less variables to consider.
I agree that the IT integration in my experience has always been the variable that we have had difficulty nailing down in a timely manner.
I have yet to experience an integration project that was on-time, on-budget, or completed as drafted. Technology integrations have generally been overly broad without enough vetting done on the complexity and value. Too often I have seen similarities pegged as synergies, which once an integration is underway, turn out to not make any sense in terms of ROI. Areas of functional integrations that have gone a bit more smoothly have been around HR functions and employee benefits – in my experience those have been much easier to quantify and rollout, with fewer “gotchas” along the way.
I agree that IT integration is a challenge but I have also encountered challenges in integrating the talent pool into a common hierarchy. Target company’s talent pool might not be happy with the seniority and bandwidth the parent organization has to offer. A thorough retention strategy for the target talent pool is a must to avoid any delays during post merger integration
I think integration timing varies more depending on the type of integration. A bolt-on acquisition requires much less integration than a tuck-in acquisition does for example. When it comes to tuck-ins I find that meeting budgets and timelines I find that the controllable variables include:
1. How well the integration assessment and planning went during due diligence (going into integration without a thorough plan leads to many problems and value leakage)
2. If the budget and timeline and developed via ground up planning or provided based on top-down estimates (the former is usually more accurate)
3. Having the proper talent on the integration team and proper external support, as well as proper support by internal resources (this requires that the M&A activity be apart of the company strategy so that it takes priority among other growth initiatives)
4. Milestones and leading indicators are monitored daily/ weekly, adjustments are made and support by leadership rapidly, and learnings are captured for future efforts
It basically comes down to execution discipline and proper support. With these elements in place, there at least is an environment to complete the integration effectively and efficiently. I think that focusing on the “means” for effective and efficient integration yields a better outcome than focusing on the budget and timeline alone. This doesn’t mean that timeline and budget aren’t important, just a recognition that improving inputs is more impactful than outputs.There are many factors in my experience, but one thing we should not ignore is the commitment from the top management. Some of the top management tend to think that the M&A is done when a target is purchased, so their commitment is gone. However, their commitment is more needed in PMI, but unfortunately, their interest could be easily gone after the deal.
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