Integration and Separation

On reviewing the success of mergers and acquisitions, firms have assessed success on two factors:

1. Did the merger meet the objectives of their creators
2. Was the deal a financial success

In recent surveys, it has been noted that executives often indicate that the mergers achieved their initial objectives 70 – 80% of the time.  However, the deals have seldom been a financial success compared to the initial financial synergies expected.

Even though, organisations can be brave in fronting the initial investment for the integration, people’s time is precious and the pressures of performing the day job often make it difficult to take time out to focus on the strategic rationale for the merger.

Other key reasons for firms failing to achieve the financial synergies expected, relate to poor planning and ineffective implementation.  There are two methods in merging companies, the soft and hard approaches:

• The soft approach includes a facilitative approach to integration involving all areas of the business, seeking all views and implementing change slowly.  This allows the two companies to understand better each other’s cultures and allows the acquirer to make a careful assessment of the people to keep
• The hard approach, is to implement change quickly and combining the “tell” approach with the less facilitative approach to understand the views of key stakeholders, whilst integrating the governance and structures quickly and removing overlapping roles

Our point of view at Proservartner is that the hard approach be affected with a two phased approach.

• Phase 1 – Transition: migrate existing functions to the merged model as quick as possible with frequent tailored communication
• Phase 2 – Transformation: assess and change organisational structures, people, processes, policies & technology with timely communication to staff and stakeholder groups as required