Risks of Mergers and Acquisition Integration

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A well-integrated company requires a solid decision-making structure in order to manage decisions, coordinate work streams, and establish the pace. The structure should be led by a highly skilled person with excellent leadership and process expertise. Perhaps a rising star within the new organization, or a former executive from one of the acquired firms. Ideally, the person selected for this job should be able to commit 90 percent of their time and energy to this role.

A lack of communication and coordination could hinder the integration process and deprive the combined entity of accelerating financial results. The financial markets anticipate an early and significant sign of value capture, and employees may interpret delays in integration as a sign of instability.

In the meantime, the core business must be a priority. Many acquisitions bring with them the possibility of revenue synergies. These can require significant coordination between business units. For example, a consumer products company that was limited to a specific distribution channel could join or acquire an organization that utilizes different channels, and gain access to previously untapped customer segments.

Another danger is that a merger could absorb too much of the attention and energy of a company, distracting managers from the business. The business suffers as result. Then, a merger or acquisition could fail to solve the cultural issues that are which is a crucial factor in employee engagement. This could lead to problems with talent retention and the loss of key customers.

To minimize the risk be clear about what financial and non-financial results are expected from the deal and when. To ensure that the taskforces for integration can move forward and achieve their goals in time, it is important to assign these objectives to each of them.

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