What are the key performance indicators of successful PMI?

This topic contains 24 replies, has 25 voices, and was last updated by  Thomas Teltscher 7 months, 3 weeks ago.

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  • #96563

    Ang Pek How
    Participant

    My opinion for key performance indicators of a successful PMI are as follows:

    1) Plan for PMI prior to due diligence and focus on the key areas during the due diligence process
    2) Clear lines of communication to all stakeholders in a timely manner
    3) Effective and efficient project management
    4) Employees retention
    5) Address and manage cultural differences
    6) Adopt the “Best of both” approach for best practices
    7) Speed

    #96790

    Dale Deg
    Participant

    Possible KPIs could include:
    1) IMO meeting the timeline milestones for the integration project
    2) Employee retention rate during pre and post closure
    3) Customer retention
    4) Meeting forecasted revenue targets at both acquire and target companies

    #104845

    Thant Coleman
    Participant

    I personally don’t believe that one could list “standard” KPIs for PMI. Any KPIs defined would be relative to achieving and sustaining the synergies and goals of the merger. In defining and understanding synergies, goals and success criteria as determined by senior leadership, KPIs would then be needed to ensure that production levels, service levels, revenues and etcetera are achieved, maintained and sustained.

    #105884

    In my opinion, a really good KPIs provided by my partners. I think that sometime the KPIs are not consider with lot of importance in a M&A and the people as us have to boots in this kind of important processes.

    #107327

    Surabhi Khanna
    Participant

    1. Key employees retention
    2. Customer retention
    3. Stock price and stakeholder reaction
    4. Post-merger integration realization
    5. Employee morale and cultural fit plan
    6. Day 1-100 plan
    7. Realization of anticipated synergies

    #107455

    Korath Wright
    Participant

    Measure of performance is different depending on what the goals of the merger are. Relevant KPI’s are determined by the strategy deployed and the synergies being targeted.

    For example, in a merger that is focused on creating revenue synergies through expanding a service portfolio, important KPI’s may include top line metrics, as well as retention of key people at the target (those who deliver the desired products). This could be a revenue-vs-goal tracker, and a service weighted retention tracker.

    Mergers with different goals will have different effective KPIs.

    #109659

    Paul Gray, MBA
    Participant

    Measure of success will always be unique to the respective acquisition matched to the expected outcomes defined or guided by the expected Synergies. That said, using the foregoing each acquisition will be unique but broadly speaking there should be some standardized KPI’s that emerge. One such plan in my opinion is to have a clear playbook for the high risk areas appropriately defined prior to Legal Day1. In other words it is imperative that your integration plan captures all the necessary activities for at least the first 90-days but more importantly should have a robust engaging engagement strategy that begins to be executed as early as Legal Day 1. I consider this critical as a lack of engagement especially on the part of the target can ensure that your integration will fail. On a look back basis this measurement will can be administered via a survey and will provide key insights for the next acquisition. For tangible synergies outcomes for e.g. Revenue Synergies, they usually require specific actions that are timebound to ensure that the value can be delivered within the established timeframe. Significant delays in ensuring these activities are established in the desired timeframe puts the synergy realization at great risk.

    #114532

    MaryBeth Gallagher
    Participant

    I think the KPIs should be designed to measure what you set your synergies (i.e., reason for the M&A in the first place) to be at the beginning. So if the synergy was to increase market-share by merging, then the KPI has to measure XX% increase from baseline in market share. If the synergy target was to expand into a new therapeutic area, then the KPI could be comparing the number of key accounts the target company had originally to the combined companies 6 or 12 months later and see how much it has expanded. If the original synergy target was to lessen competition, then the KPI could be measurement of the economies of scale because of the merged organization.
    Most of the posts were measuring retention of employees, but that may not be useful if they are paid retention bonuses (it is almost a false sense of security they are staying for the money, not because they love the combined company). My experience in measuring KPIs is that the measure really should be hard with actual data – not sure how you measure successful communication or quality as soft measures – they would really need hard data to be an accurate representation of the success.

    #114783

    Rodney Satterwhite
    Participant

    Spelling out milestone/measures of success are actually part of the project management process… normally in the team charter.

    #116629

    Thomas Teltscher
    Participant

    some that come to my mind are:
    % of synergy target realized, % synergies vs total cost base
    % employee attrition, perhaps as variance vs previous periods
    % change in absenteeism
    % revenue lost (e.g. loss of customers)
    % change in key process KPIs (where these KPIs depend on the industry), i.e. did the business get better / more efficient
    integration spend vs budget
    % share value change
    survey scores, e.g. internal employee surveys

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