Integration Management & Synergies

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  • #55479
    Albert TAN
    Participant

    Very often,when one goes about acquiring another, they look narrowly only at one aspect or one purpose of their efforts without considering that after acquiring the target, they have to spend time to assimilate them into their own fold,convert them into synergies and realise the true worth of that acquisition. That is the reason why many acquisitions failed.Not because they were bad in the first place,but they ignore the post integration aspects. So it is important to plan for an acquisition, and equally as important to plan for the aftermath of the acquisition. Otherwise, whatever one pay for the acquisition will not be realised, and it will failed.

    I gave one example of a Singapore HQ furniture maker listed on SGX, but sold off to a China congolmerate in 2016 That China Group was on a spree of a spat of acquisitions in China and HK and saw the acquisition of the Singapore company to be a lkey one. But during the five year after the acquisition, they ill manage the company and subsequently, the company failed.

    #55641
    Michele Learn
    Participant

    I think this is why we need more recognition in the field of Post-merger integrations. Often companies do not have an M&A specialist or M&A department with expertise on these type of projects, integrations can have unique requirements and be complex. If a company is intending to strategically acquire other companies it is probably a good idea to prepare ahead of time by internally training specialists or hire the necessary expertise to help maximize the potential for success.

    #56212
    Kim Morrison
    Participant

    Integration planning needs to be part of the Due Diligence process as explained in the Process model. When the integration planning starts at this time, the assumptions on where synergies may be realized can be tested. This helps the team to focus on risks, but also to learn how the business functions. This knowledge is invaluable when it comes time to plan the integration. The 360 approach is a great way to avoid this too narrow view. It reminds the DD team to look at all aspects of the business. Knowing the risks going in and how the business functions at a high level will help to eliminate issues later.

    #56783
    David Desmet
    Participant

    Fully agree, and as shown by several academic papers, ~50% of integrations are not successful because of the reasons mentioned above. Assessment of synergies, planning not only day 1 (closing), but also day 100 (capturing low hanging fruits & other synergies) need to be planned as soon as possible. It is clear that the level of detail and available information will grow throughout the process, but nevertheless, starting whenever possible is key

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