Post-Merger Integration

Most mergers are based on integrating companies to achieve multiple benefits including cost savings, streamlined management, a unified vision and profitable revenue growth. However, making changes to the commercial organizations and customer-facing teams carries inherent pitfalls and potential downsides arising from both internal and external factors.

Reacting to the potential risks, many acquirers proceed too cautiously. They may take too long or allow only partial integration. Potential benefits are reduced or not realized. Acquirers who are confident and able to manage risks of integrating commercial organizations have an advantage in creating value.

Our approach with merging companies is premised on addressing both immediate and longer-term priorities. Urgent priority is given to plans for retaining key customers, high-performing sales reps and channel partners and for quickly implementing cross-sell synergies. Strategic plans are required for effectively communicating merger benefits to the market, maximizing the best commercial capabilities from the merging companies (“1+1=3”) and for aligning incentive systems to the investment thesis value drivers.

Integration efforts should focus on capabilities to succeed with customers, rather than simply fitting names with boxes and titles in a merged organization chart. Merging companies with a near-term focus on specific names and roles misses the opportunity to structure the organization toward an optimal operating model for the future – a key for guiding today’s decisions for merging entities.

While knowing where the company is looking to be long term helps guide how they initially merge the combining entities, companies need to make an honest assessment of their current state to understand how far away they are from their desired future state. Understanding the current status helps to prevent more disruption than is necessary, while putting the firm on a path for implementing its long term operating model. And providing multiple options to achieve a target operating model helps management manage value opportunities against risk.

 

Post Merger Integration