I’ve had a number of very heated conversations with colleagues about the nature of post merger integration in recent weeks. The two positions are easy to understand; on the one hand, there is the perspective that a deal is just another complex transformation project with all the usual challenges. On the other side of the debate, the argument goes that post merger integration represents a wholly different type of challenge which, whilst it contains components and disciplines which are aligned with other complex transformation activities, also has elements which are different. I’m going to make the case for the latter below…and would really appreciate commentary relating to the former if you have a view.
So what is it about post merger integration program leadership that distinguishes it from other complex projects? I’ve come up with 4 reasons…but no doubt there are many more.
- Complexity without clarity; There is a case for saying that many complex projects suffer under a lack of clarity in terms of the ultimate deliverable but in my view, that is due to poor alignment and scoping rather than a consequence of the nature of the transaction. In deals, the reality is that even with the best diligence process, good and frequent access to the vendor in a friendly process, and correct resourcing etc, the nature of anti trust regulations means that your first real view of the organisation you’ve bought is on day 1….and similarly to buying a new piece of technology, learning about it and how it works is a complex task in itself and takes some time. For the program leader therefore, ‘reverse engineering’ a set of targets and objectives over the first 100 days into an investigative analysis process is a critical initial step.
- Find me a stakeholder! I’ve talked previously about the misalignment between the diligence and post deal aspects of a transaction. Those stakeholders who are involved in the decision around going ahead with a transaction often disappear post completion. I wouldn’t for one moment suggest that this is deliberate (!) but ultimately the challenge of who runs the business going forward is rarely answered and more specifically the handover between stakeholders is not managed particularly well if at all.
- Synergies, what synergies? It’s rare in my experience that the business case bears any resemblance to the reality on the ground in terms of synergies. This is not because of any failing on the part of the author of the business case, but more a reflection of the distraction that occurs between a strategic review, a disjointed diligence process and the post deal phase. Too often the integration director is looking at a set of synergies which are at best very high level, based on very early assumptions which have become ‘baked in’ to the business case with little or no further analysis or research.
- Whole company impact;For the acquired business, every employee (and their dependents), contractor, supplier, customer, is potentially impacted by the transaction. Despite all reassurances that the deal is positive and there will be no change in business operations (which is often the case in Asia where I’m based), the history of M&A is such that trust in this statement is very limited. The communication and change management challenge is therefore enormous and stakeholders who, in the eyes of the acquirer, sit on the periphery of the deal because their area is not impacted, require as much attention as those at the heart of it.
This is obviously fundamentally different from those on the acquiring side…where the company will make a deliberate effort to avoid disruption, and where from the perspective of an acquirer, the concerns of employees are more limited because of the perceived strength of their position.
Let me know if you have more to add…let’s try and draw up a more comprehensive list.