Risks of Mergers and Acquisition Integration
A well-integrated company requires an effective decision-making structure that can triage decisions, coordinate work streams, and establish the pace. The structure should be led by a highly-skilled person with solid leadership and process abilities. Perhaps, a rising star within the new company, or a former executive from one of the acquired firms. Ideally, the person selected to fill this position must be able to dedicate 90 percent of their time to this task.
A lack of communication and coordination can delay the integration and deprive the new entity of accelerating financial results. Financial markets expect the first signs of value capture. Employees might interpret a delay as a sign that the company is unstable.
In the meantime, the business of base must be a priority. Many acquisitions can create revenue synergies and require coordination between business units. For instance, a consumer product company that was confined to a certain distribution channel might join or acquire an organization that utilizes different channels, and gain access to previously untapped customer segments.
A merger can also divert managers from their job by absorbing too much energy and attention. The business suffers as a result. Finally, a merger or acquisition may not tackle cultural issues – a key factor in employee engagement. This can lead both to problems with talent retention and the loss important customers.
To minimize these risks, clearly articulate what financial and non-financial results are expected from the transaction and when. To ensure that the taskforces for integration are able to advance and achieve their objectives on time it is crucial to assign these goals to each of them.
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