Impact of covid-19 on the post-merger integration process
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It is observed that due to the covid-19 pandemic, the number of consolidations (including mergers and acquisitions) across many industries has been on a rise. Do you reckon that the covid-19 pandemic has slowed down the post-merger integration process due to the lack of physical interactions between employees and disruptions to the meetings between key strategy officers especially for companies that operate on a cross-jurisdictional basis?
Hi Jesslyn, I do assume that yes at the beginning of the pandemy a slow down on the PMI process was perhaps observed but i have heard of solutions to move forward that really surprised me. In one case, a company (advisor) worked really on the technological solutions side to be able to improve the sites visits before or after acquisition (For example software application connected with drones controlled only by the advisor and visiting the sites with the target and the target not being allowed to block or hide parts). The main issue that I do feel during covid it s on the cross-cultural exchanges and integration, online is really not the same as meeting physically, especially to clear hurdles at the beginning of the process. The use of big data and top technologies will help the integration for sure but I do assume that the lack of physical meetings especially at the beginning or on key milestones will slow down a bit the process (you can not really read the body language of 15 people of screen or when they switch off their cameras or when they are many in a room…). I assume we do not know yet the full list of long term effects (+ or -). It just makes thing a bit more complicated but not impossible. We adapt to the environment.
The article below could potentially interest you (See page 6 paragraph 3.3 Impact of COVID-19 on M&A Process, and page 9 Digitalization of M&A Activity) “Impact of COVID-19 on Mergers, Acquisitions & Corporate Restructurings” Chokri Kooli, and Melanie Lock Son, MDPI August 2021
https://www.mdpi.com/2673-7116/1/2/8Hi Jesslyn, from my view, integration is definitely harder through the pandemic, given work from home arrangements etc. What would be more concerning is that while integration may appear to be successful now, it may be disrupted once employees start interacting more in person
Data on the IMAA website actually showed that many sectors suffered significant reductions in M&A activity as a result of the COVID-19 pandemic, as opposed to an increase. This is possibly attributable to heavy losses sustained in some industries as a result of government posed lockdowns, is tourism and hospitality, airline, oil&gas, etc. Although I would say that the rapid adoption of online collaboration tools such as zoom and Microsoft teams would boost M&A activities as people can now meet more readily and from any global location.
I would say that COVID-19 has opened up many opportunities for companies to acquire because some companies have collapsed due to supply chain disruptions and needed funding. On the other hand, it also allows businesses to take a hard look at their business continuity plans to avoid the potential troubles when acquiring another company.
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