Risks of Mergers and Acquisition Integration
A well-integrated company requires an effective decision-making structure that can make decisions, coordinate work streams and set the pace. This should be managed by a highly skilled person with solid leadership and process abilities. Perhaps a rising star within the new organization or a former executive from one of the acquired firms. The person who is chosen to fill this position should be able to commit 90 percent of his or her time to this task.
Insufficient communication and coordination will slow the process of integration and deny the combined entity of speedier financial results. Financial markets expect an early and significant sign of value capture, and employees may see the delay in integration as an indication of instability.
In the interim the core business has to remain the main focus. Many acquisitions can create revenue synergies and require coordination between business units. For instance, a customer products company that is restricted to a certain distribution channel might join with or acquire an organization that utilizes various channels and gain access to untapped customer segments.
A merger can also divert managers from their job by taking up too much energy and attention. The business suffers as result. Then, a merger or acquisition may not address issues with culture – which is a crucial factor in employee engagement. This can result in problems with talent retention and the loss of important customers.
To avoid these risks you should clearly state the financial and non-financial outcomes that are expected and when they will occur. Then, parcel out these objectives to the individual taskforces that will be working on the integration check to accelerate and bring one integrated company in time.