Merger Integration Elements of Success


July 21, 2021

By: Sean Mooney

Every year, the private equity industry focuses a tremendous amount of energy on add-ons as a core expansion strategy to build bigger, better, and more valuable companies. We saw a particularly strong amount of activity last year during the pandemic as competing businesses saw more value being more together than apart. This trend has continued into 2021, and as such we’ve seen an uptick in requests for specialized groups and individuals with deep experience in merger integration. 

According to our Intelligent Network merger integration experts- who have focused their careers on making merger integrations go well the first time- there are several key elements that allow merger integrations to flourish. If you’re considering an acquisition or add-on as part of your long-term plan, keep these elements in mind before you pull the trigger. 

ELEMENT #1 – Keep an open mind 

Keeping an open mind during the initial integration process helps eliminate bias and allows the process to move more quickly, while also avoiding employee and customer attrition. You’re acquiring the target for a reason.  You’ll no doubt find a wealth of perspectives in your target that will make the combination better for all.   

ELEMENT #2 – Know the investment thesis 

If you have a clear understanding of the investment thesis and how the integration fits into the broader picture then it will be much easier to develop a roadmap and, as Stephen Covey aptly asserts: “begin with the end in mind.” 

ELEMENT #3 – Understand who has the best system in place 

By clearly defining a business capabilities chart upfront, then doing an assessment of which organizations have the best capabilities in place, everyone benefits. Remind yourself that for 1 + 1 to be greater than 2, you need to seamlessly integrate the best of both. 

ELEMENT #4 – Prioritize agility and flexibility 

As Mike Tyson famously once said, “everyone has a plan until they get punched in the mouth.”  Once you get started, you’ll learn new information and will need to adapt your plan.  If you can set the expectation that agility and flexibility are key components of an integration, this gives people permission to let go of pre-conceptions, embrace change quickly, and smoothly transition to the best version of the “new normal” with speed and excellence  

ELEMENT #– Beware of overloading IT 

During a typical integration period, the IT department tends to absorb a very heavy load of the “asks”—because of technology’s integral role in the process. Make sure there is a system in place that enables communication between integration leadership and IT to avoid the mistake of overloading them. 

ELEMENT #6 – Communicate clearly, early, and often to employees 

One of the biggest mistakes made is that acquirors try to let things settle for a while before they begin integration activities.  During any major shift of change, people are often fearful of what this means for their personal and professional futures. By offering insight into what is happening immediately after you close your transaction and sharing what will happen, even if it’s not what they want to hear, employees can embrace an integration with less trepidation. Be sure to promptly follow your communications with aligned actions.   

ELEMENT #7 – Lead by example 

This should probably be #1 (and likely goes without saying), but leadership is ultimately responsible for the success or failure of an integration. Acquisitions have a unique ability to either make or break a company.  If you’re in a leadership role, don’t pass off important steps of the process to lower-level managers, particularly with more nuanced or difficult changes. Lead by example and show that you have bought into the task at hand by holding others and yourself accountable for the outcomes.  Make acquisition integration part of your leadership meetings and make sure the buck stops with a key leader in your organization who can catalyze buy-in and action.   

Check out the case studies on how we’ve helped clients connect with the merger integration experts that are right for them here and here. And as always, if you have an immediate need we can assist with, contact us and one of our team members will be with you immediately.