Post-acquisition integration

Give your acquisition deal the best chance of success by merging your business with the target company in the most appropriate way.

The success or failure of any acquisition deal is governed not so much by what you buy, but what you do after you’ve bought it, and how well you do it. Merging your newly purchased company with your existing business can be a complex process, and a number of problems can arise. For instance, cultural differences between the two companies can undermine the success of the deal, and coordination problems can be greater than expected.

In the course of our work with client companies we have encountered and solved all of the major post-acquisition integration issues. We also know how to spot issues that are unique to a particular combination of purchaser and target company. Contact us for help in avoiding the many pitfalls of post-acquisition integration.

In the meantime, we are pleased to provide some basic integration tips, along with some guidelines for compiling a post-acquisition integration checklist.

Tips for a successful post-acquisition integration

To give your acquisition deal a fighting chance of success:

  • Investigate different options for an appropriate organisational design for the target company, rather than imposing your own structure.
  • Carefully manage the issues around control. Centralised control that deprives the target company’s management team of autonomy might demotivate and result in a poorly performing organisation.
  • Design appropriate incentives for the acquired company’s management team.
  • Remember that previous compensation arrangements affect how any new arrangements are perceived.
  • Consider whether standardising pay scales, work rules and brands is really a good idea.
  • Bear in mind that worker dissatisfaction can be very damaging, especially if you are in a service industry or if key employees have a high degree of bargaining power.

Creating a post-acquisition integration checklist

Your acquisition integration checklist will vary widely, depending on whether:

  • your acquisition will remain as a “standalone” or be “rolled in”, or some combination the two
  • your company and the acquired company are manufacturers, distributors, service providers or a combination of two or more, and whether they are public or private companies.

In general, however, the following guidelines apply:

  • Begin creating your post-acquisition integration checklist during due diligence as issues surface.
  • Create a cross-functional integration team from your company and a corresponding team from the acquired company at the appropriate time. Ask team members to list and prioritise issues affecting both sides, and to make recommendations and set timelines.
  • Create a secure intranet site “data room” to contain appropriate plans and other documents.
  • Ensure that team members meet regularly via conference calls, “go-to” meetings and in person when required.

Common post-acquisition integration issues

These will vary according to the nature of the acquisition and the companies concerned, but there are several common threads:

  • Communications to customers, employees, shareholders and regulatory bodies. (Make sure you control all communications.)
  • Human capital issues such as relocation and severance packages, alignment (or not) of benefits and salaries, and training requirements.
  • Operational issues such as integration of telecoms, movement of equipment, and consolidation (or not) of back office and customer-facing functions.
  • Sales and marketing issues such as customer integration and communications, pricing, website integration and co-branding.
  • Financial matters, including financial reporting integration and consolidation of banking, sales and purchasing accounts and other functions.
  • IT integration (or not) across platforms such as websites, order entry through invoicing, and various secondary platforms.

Your checklist may seem daunting, but don’t skip any items if you want a successful outcome from your acquisition deal.

Next steps to an indispensable integration checklist

For help in compiling or executing your checklist, email us or call us on 020 7099 2621.

See also our guidance on mergers and acquisitions and due diligence.