The Post-Acquisition Integration process refers to the various steps and strategies required to create value from the transaction. It, therefore, involves adequate planning and preparation, as well as strategic decision-making, to ensure that the acquirer and acquired firms achieve complete and seamless integration.
It is important to note that certain complexities are involved in integrating two formerly separate entities. Generally, the overall goal of the integration process is to maximize the efficiency of the two organizations. Therefore, adequate planning should therefore begin even before the conclusion of the Acquisition.
Steps to Managing the Post-Acquisition Integration Process
The Integration Process is typically anchored by either a management team (made up of members from the parent company or both organizations) or a designated officer of the parent company.
- Begin early: The first step in the integration process is to start early. Planning toward the integration process should begin as soon as the Acquisition is contemplated. How easy it would be to integrate the two entities is a factor the organization should consider in determining whether to proceed with an acquisition.
- Formulate short-term and long-term goals: Both short-term and long-term goals are required to drive the integration process. Formulating these goals will entail leveraging the systems and technology of both entities.
- Short-term goals are an easy way to track milestones. Achieving short-term goals also serves as a motivator for all the stakeholders to keep working toward achieving long-term goals.
Short-term goals may include identifying existing duplicate positions (This is a situation that is very likely to occur since an Acquisition involves two separate organizations); Modifying salary and benefits packages (this may be necessary for the purpose of retaining certain key employees or to compensate for an increase in workload resulting from the bigger entity); filing required documentation with the relevant regulatory bodies. It is always in the best interests of an organization to have its administrative filings in order; these are seemingly “little” tasks that could easily slip past anyone’s notice but could create more significant problems in the future. Ensuring that all the required updates to documentation are effected can be a short-term goal that can quickly be ticked.
- Long-term goals could include;
- Focus on all areas: Integration has to be ensured across all departments. This is because any department with integration problems will eventually affect the organization if ignored for too long.
- Leverage human capital: An organization is made up of people and can only be sustained by its people. The employees are a significant asset to the organization, and full integration can not be achieved without them. For an organization to leverage its human capital, it must ensure that its employees remain motivated and keep them involved during the integration system. This can be achieved by constant communication and welcoming contributions to the formulation of integration strategies from skilled and knowledgeable employees.
Further, an organization should focus on absorbing key employees from the acquired entity and promoting them if applicable.
- Carry everyone along: This refers to both the members of the integration team as well as the entire organization. Transparency and communication during the entire integration process will ensure that the organization keeps sight of the integration goals and the overall vision. In addition, it is easier to keep all the people involved from both organizations motivated if there is adequate communication about different stages of the integration process, milestones achieved, pending goals and targets, etc.
- Document key processes: Documenting critical processes during the integration process creates a point of reference and prevents the loss of information, strategies, plans, and structures that may be useful in the future. It is risky to rely on human memory or employees to store such processes. This is because, in the event of a sudden exit by such an employee or other unforeseeable circumstances, such valuable information may be lost.
- Periodic evaluations of the integration process: It is crucial for the organization to evaluate the integration process regularly. The purpose of the evaluation includes tracking the progress of the integration, identifying strategies that may have failed, identifying strategies that work, setting new goals, identifying problem areas, identifying new challenges, identifying setbacks, making room for innovation, saving resources, etc.
The result of periodic evaluations is that the organization is able to limit the occurrence of significant or irreversible setbacks and prevent and quickly recover from setbacks if any have already occurred. The organization is also better able to pace its actions knowing when to pause, proceed, change strategies, opt for a gentler or more aggressive approach, seek more skilled help, etc.
How to build an Integration Management Team
An organization may either build an internal team or engage a consulting firm to manage the integration process. Each option has its own advantages. Engaging a consultancy firm to lead the process has the advantage of having skilled professionals handle the integration process. On the other hand, building an internal team has the advantage of having individuals who are already familiar with the organization, its processes, values, culture, etc., lead the integration process.
Some of the following factors should be considered when trying to build an internal integration management team;
- Choose employees from both organizations: The integration process requires the two organizations; therefore, forming a team with members from both organizations working together to achieve integration will further drive the process.
- Factor in all functional categories when building the team: This will include Human Resources, Legal, Finance/Accounting, Technology, Management, Communications, Sales and Operations, etc. This will help in task division. When tasks are assigned to employees who are already skilled in that area, it saves time and resources.
- Choose skilled and motivated employees:
Conclusion
Different organizations will require different Post-Acquisition Integration processes. This is because in developing a Post-Acquisition Integration plan, an organization must factor in its specific circumstances, such as the industry of operation, jurisdictions, applicable laws, resources available, size, etc. The key to achieving integration success is proper planning.