An old adage compares the process of a successful corporate merger or acquisition transaction to trying to complete a large puzzle—when your right and left hand have never worked together. To put it mildly, the success of any merger and acquisition (M&A) deal requires the coordination of a plethora of moving parts.
Further complicating matters is the fact that there are suddenly two companies and additional stakeholders that now need to seamlessly work together and communicate with each other to bring the deal to completion.
But what happens after the deal crosses the finish line?
Research suggests that the results aren’t great. About 70% of all M&A deals will fail, often partly due to integration problems. Additionally, experts agree that even though stakeholders are paying greater attention to integration, it still proves to be a difficult process.
While there are many post-merger integration hazards for deal stakeholders to be aware of, here are four leading pit-falls that keep deals that look good on paper from being prosperous.
- Failure to keep integration in mind throughout the early stages of the M&A process.
This is an especially problematic issue for buyers. The detail-laden pressures of the due diligence process often overshadow the extreme importance of executives planning and setting the tone for integration. Planning for integration can take several different forms. For instance, the buyer should host a kick-off meeting when due diligence begins and assign an immediate task to the target company. This helps the buyer gather key information about the target company, such as its ability to complete short tasks related to the upcoming integration in a short period of time.
Also, early in the process the buyer should ensure it is being connected to the right people from the seller. This will assist the buyer in getting a complete picture of the target company—something that is especially useful when dealing with smaller companies that may not have been through the M&A process before and may not have the manpower for an integration team.
Finally, all key stakeholders should have an open dialogue about post-merger integration issues throughout the deal process.
2. Lack of communication leading to redundancy and fatigue.
Not considering how teams will communicate and failing to realize that silos of information exist can lead to major problems, including redundancy, inefficiency, and fatigue. In some cases, teams don’t properly coordinate with each other and end up working on the same tasks.
Executives and post-deal integration teams can combat this problem by implementing short daily meetings for each workstream and weekly or bi-weekly meetings for the facilitators of these groups. This “reporting-up” should continue until the relevant information reaches the top level.
These brief meetings—often 15 to 20 minutes—have a variety of benefits such as establishing and maintaining clear roles for all employees and teams, eliminating redundant tasks, improving accountability—which helps fight fatigue that often sets in around day 100—and ensuring decisions aren’t being made in a vacuum.
Another way to help solve these issues is to invest in a data-sharing software platform. These project-management tools, which are designed for the demands of M&A processes, allows for increased transparency and efficiency.