October 14, 2019 at 3:25 pm #96952
What method or information would you suggest to help convince upper management of an acquirer to properly invest/budget for an integration project?October 15, 2019 at 12:04 pm #97011
I would simply advise them of the statistics that show a high percentage of acquisitions/integrations fail and that synergies are at risk without proper focus. Upper management commitment is critical. Best of luck !
TomOctober 27, 2019 at 3:49 am #97861
Hi Dale – Great question. It would be important to make a business case to upper management that integration of a company is as important/more important than the due diligence of the deal itself. Integration is about realizing the synergies (economy of scope/economy of scale) as well as ensuring back-office efficiency (system integration), cultural integration, people integration, product integration, etc. Additional research that shows how integration is essential for a deal can help make a business case. With research showing 50 – 90% of deals tend to fail, integration is important to mitigate that risk.November 9, 2019 at 7:17 pm #99240
This calls for a detailed business case presentation to senior execs explaining the benefits of having a separate IM office as doing deals is risky and too many acquisitions don’t achieve the expectations set for them. Carefully developed strategy too often does not translate into integration success. Converting integration strategy into detailed actions and managing those actions across the combining enterprise is critical for success. A governance structure must be in place to align people, process, and systems with integration objectives.
Establishing an IMO plan for the purposes of managing integration is highly recommended, as it provides a “home base” for all integration activities and can be set up as a unique cost center to capture integration related expenses.
At its essence, an IMO is a temporary M&A program management office that:
1. Drives development of overall integration plans, including all the integration projects, communications plan, and synergy benefits
2. Defines and manages your integration processes, including functional work plan reviews, cross-functional collaborations, issue management and executive status updates
3. Manages stakeholder communications, including company executives, functional resource owners, and acquired company management
4. Drives the pace of integration, disciplines and protocols for execution
5. Tracks continuous improvements such as measuring and surveying various areas, incorporating feedback into updated integration processes and tools, etc.November 18, 2019 at 5:59 pm #100006
A well developed business case supported with historical and current data that presents the risks which will occur and must be mitigated during post merger integration. While most leaders understand post merger is the high risk period many tend to not understand how high the opportunity for failure is during this time frame. Present a clear case for a limited engagement period to senior leadership and include the following –
– Clear purpose
– Proposed resources
– Budget needed
– Tools required
– Value captured
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