Risks of Mergers and Acquisition Integration
A fully integrated company needs an efficient decision-making system to make decisions, coordinate work streams, and establish the pace. This should be supervised by a highly skilled professional with a strong leadership capability and processes, perhaps an emerging star within the new organization, or a former leader of one of the acquired companies. Ideally, the person selected to fill this position must be able to dedicate 90% of their time to this task.
Inadequate communication and coordination could slow integration and prevent the merged entity from achieving rapid financial results. Markets expect early, substantial signs of value capture. Employees might interpret a delay as a sign that the company is in a state of instability.
In the interim the core business needs to remain the primary focus. A lot of acquisitions result in the possibility of revenue synergies. These can require a lot of coordination between business units. For instance, a long-standing consumer products company who was restricted to a few distribution channels could join forces with or purchase a company with different channels in order to gain access to new segments of customers.
Another danger is that a merger can soak up too much of the attention and energy of a company which can distract managers from their business. The business suffers as result. A merger or acquisition may fail to address the culture issues that are critical to employee engagement. This could lead to talent retention problems and the loss of customers who are important to you.
To reduce the risk To avoid these risks, clearly state the financial and non-financial benefits that are expected from the transaction and when. Then, delegate these goals to the different taskforces involved in the integration process to ensure that they are able to achieve their goals and deliver one integrated company on time.
