The importance of post-merger integration planning any merger or acquisition is rife with risk. Will your company lose its focus when you join another company? Will you lose key employees from either company – or both? So, Will financial performance suffer?

If you are the buyer, you need to consider the synergies, risks, value drivers, and the integration plan as soon as serious negotiations begin and well before the transaction closes.

Post-Merger Integration: Start Early to Finish Strong

Realizing the maximum potential of a transaction poses complicated and unique challenges since no two deals are alike.

Clearly defining and managing post-merger integration activities is one of the most important elements of a successful transaction. A rigorous post-integration approach can drive the ultimate success of the deal while minimizing risk and avoiding missed opportunities and unintended consequences.

For example, if the integration commands too much focus or takes too long to complete, leadership – and as a consequence, all employees – will lose focus on the primary goal of operating the business effectively and profitably.

Start integration as soon as the deal is announced

You can begin planning the integration process before the deal is even announced. Once it’s official, you should immediately address the following to ensure a successful integration:

Decide whether to engage a consulting firm to assist in developing and executing your integration plan. If you’re experiencing internal bandwidth or technical skill constraints, this will be essential to successful integration.

Identify and define pre-close integration planning considerations and requirements including, but not limited to:

Financial Operations

Corporate Document Retention

Management Structure

Data Room Creation

Intellectual Property

Technology

Sales And Operational Processes

Insurance Coverage

Material Contracts

Management Structure

Anti-Trust/Regulatory Hurdles

Property Plant & Equipment Identification

Litigation, Environmental, Or Tax Matters

Customer And Employee Retention

Customize a carefully planned vision statement explaining how the deal enhances the company’s fundamental structure and future goals. A clear vision statement illustrates where the potential for profit growth exists and where the risk lies. Due diligence on both the deal and the integration plan should be structured around this vision.

Make major decisions ahead of time, if possible, to enable key functions to begin immediately. For example, identify and name top-level management groups quickly, but with deliberation and objectivity.

Select integration team members

Choose highly motivated and skilled employees from both companies for the integration teams. Serving on the integration team will require a tremendous amount of effort from the acquired organization, creating an extremely stressful workload.

Watch carefully for signs of fatigue in the team to minimize the risk of losing key talent. Identify these team members’ future roles in advance. Too often, integration teams fail because of the lack of a future plan for those employees selected for the team.

Plan the integration structure

Divide integration activities into functional categories like Sales, Manufacturing, Service, Facilities Management, Human Resources, Legal, Finance, and Information Technology. Specialists in the functional areas with outlining and performing integration tasks within their area of expertise.

This will make the integration run faster and smoother, as the experts and integration planning users are intimately in the process. Certain cross-functional categories will require input from multi-disciplinary teams to capture desired synergies and positive results.

Most importantly, the integration plan must be clear. Tasks and accountability for those tasks, along with specific timelines, are key to integration success. An improperly planned integration structure will lead to turmoil.

Create an internal communication plan

Change makes people nervous. To create the “NewCo Way” successfully, cultures and roles must at all levels, and expectations of the existing and target company’s employees clearly communicated–before the deal.

Employees on both sides of the transaction will wonder what the deal will mean for their respective roles and how, or if, they will fit into the new company.

The leadership teams must consider critical messaging and communication to employees, not just to shareholders and customers.

Keep the overall message consistent

The new company’s leadership must be consistent when communicating the story about goals, objectives, changes, and risks associated with the transaction.

You can avoid stressors to morale by focusing on how the deal will benefit your people in the future rather than on the synergies it will produce for the organization. Many people associate the term “synergy” with layoffs and cost reductions.

This is why focusing primarily on the benefits of the transaction – in both internal and external messaging – is generally a better path when trying to win the hearts and minds of the newly combined team.

Establish clear exit criteria

If a buyer does not set clearly defined exit criteria for the integration of the company operations, then it will be difficult for anyone to know when it is officially complete. Having clear exit criteria helps integration teams know what must be accomplished and when.

From there, they can work backward to determine the tasks they will need to complete to meet the criteria. Generally, their exit criteria are built around key processes and departments such as Accounting/Finance, Legal, Human Resources, Information Technology, Sales, Operations, and Marketing.

Each integration team should come up with the appropriate exit criteria to determine when integration for their respective area will be complete.