Risks of Mergers and Acquisition Integration

A strong decision-making framework is required to take decisions, coordinate work streams, and set the pace for an integrated company. The structure should be led by a highly skilled person with strong leadership and process skills. Perhaps a rising star within the new organization or an executive from one of the acquired companies. The person chosen for this role should be able to commit 90 percent of their time to this task.

Lack of coordination and communication hinders integration and prevent the merged entity from achieving rapid financial results. Markets expect the first signs of value capture, and employees could see delays in integration as a sign of instability.

In the interim the core business should remain the priority. A lot of acquisitions result in revenue synergies, which can require significant coordination between business units. For instance, a consumer products company that was limited to a few distribution channels could join with or acquire an organization that utilizes different channels, and gain access to untapped consumer segments.

A merger can also divert managers from their job by consuming too much energy and attention. This means that the business suffers. A merger or acquisition might fail to address the culture issues that are vital to employee engagement. This can cause problems with retention of employees and the loss of customers who are important to you.

To avoid these risks be clear about the financial and non-financial outcomes that are expected from the deal and when. Then, delegate these goals to the different taskforces that will be working on the integration to accelerate and bring one integrated company in time.

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