Post Merger Integration – Lack of Awareness

  • This topic has 4 replies, 5 voices, and was last updated 9 months ago by Sumit Rambani.
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  • #36360
    Sumit Rambani
    Participant

    Why there has been a lack of awareness among many M&A teams on Post Merger Integration? Teams are focused on closing financial numbers and commercial negotiations but the development of the Post Merger Integration plan is always lacking.

    #39069

    Hi @rambansx — Good question. There are many reasons that this could be the case including differences in the perception or priorities for the outcomes, internal corporate politics, inexperience of the M&A teams in the development of integration plans, or even the perception that they did cover all basis at the time the integration plan was developed just to name a few. Remember too, regarding that last point, hind sight is always 2020. When you are in the thick of it, with so many moving parts, there is only so much you can plan for. Inevitably there will be unforeseen issues that come up, things you just cannot plan for that, when looking backward, we often are surprised there was not a plan for. In the end, the integration planning team must to the best they can with the information they have, guided by the transaction thesis and a strategic plan for the merged entity, and then still be flexible enough to adjust to the unknowable and unforeseen issues when they arise.

    #39080
    Boon Hon Low
    Participant

    I believe this is driven by incentives. The deal team may be rewarded on the success of the deal upon closure. This team may not continue to PMI. Even if the team continues to PMI, the fees for the team is unlikely to be as rewarding as that for closing the deal.

    #39095
    Sam Chee
    Participant

    Yes, I agree that most M&A deals are transaction-driven, rather than sustainable outcomes-driven. I suppose it is partly the compensation driving such behaviours, and partly decision-makers (boards, management) not focusing enough on the longer-term performance – post-acquisition, it becomes an operational issue to be resolved by the operations team rather than the deal makers that say provided an overly optimistic financial model (and financial targets) which the operations team struggle to achieve/execute as they were not involved in the deal.

    #39115
    Ameera Alhawaj
    Participant

    Post-merger integration lacks awareness among mergers and acquisitions (M&A) since teams focus on the financial and commercial negotiations. Companies opt to merge to remain viable in the market while others are acquired due to leverage obstacles.Therefore, the entities seeking an M&A select organizations that can salvage their situations and continue obeying the going concern principle. However, overestimation of synergies, a lack of strategic plans, overpayment, and inaccurate data create the collapse of M&A. The teams neglect to develop a post-merger integration and focus on the financial gain. Thus, the lack of awareness results in the failure of M&A within short periods.

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