M&A Integration Plan: Key Elements and Best Practices

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 So, you’ve built your business up, you have a bit of power, and you just bought a smaller company to merge it into your own. You’re finally hitting the big leagues, and you’re succeeding as a business professional. That’s perfect, right? Well, how do you actually handle the merger you just signed up for?

Well, handling a merger and integrating it appropriately is a complicated process. In fact, it’s where many business professionals mess up their otherwise great success, so for the merger to flow smoothly, you need a proper M&A integration plan. 

Luckily, you’re not in it on your own. You don’t have to wing it. We can help guide you through the key elements and practices that facilitate a smooth merger integration, and if you really want hands-on guidance, you can contact Final Ascent to make the transition as smooth as possible.

The Key Elements of a Good M&A Integration Plan

The easiest way to understand the parts of a solid integration plan is to separate the highly complex process into five easy-to-understand parts that you can focus on individually. If you just try to lump it all together, you’re going to get a mess that doesn’t produce worthwhile results. There’s just too much that doesn’t get accounted for when you do it that way.

People connecting puzzles together

So, we’re going to go over the five core concepts of m&a you should consider before we get into how you should incorporate them.

Build a Timeline and Objective:

You can’t plan an integration unless you sit down and consider how long it will take for each action to take place and develop an end goal for it.

When will you have the employees fully prepped? How many weeks will it take to fully integrate the new business and pull in its customers? What do you want to achieve from it?

All of this and more has a lot to do with this step in the process, and if you don’t figure those things out, your M&A will eventually fall apart. That can be financially devastating for both parties. Spend time on this step, and use it in conjunction with the following concepts we introduce.

Of course, if nothing else works, you can always hire someone who offers M&A advisory services and make the process easier for both parties.

Develop Synergy Between Owners and New Processes:

When you merge two companies, there is going to be a bit of “culture shock” per se. Each owner involved has developed their own way of doing things, and they’re not just going to give that up. It takes time and effort to make that happen. 

You can minimize how difficult that process is by trying to find a sense of synergy between all the owners involved and the initiatives you plan to put in place. 

If you get all the main guys on board, it will go a lot more smoothly. 

Honor Employee Incentives and Rewards: 

Obviously, your company and the merging company have developed different ways of appeasing employees. Maybe your team is used to getting a Christmas bonus based on overall profits for the year, but the other team might have been used to just getting a pizza party. Align the incentives to match the new company structure.

In the example we gave, it’s very easy to do that. Every employee used to getting half a slice of pizza and a little cup of soda is bound to love getting a share of the company’s profits. However, it will now always be that easy. In fact, most of the time, it isn’t. It will be up to you to align those expectations with what the merger will offer. Disgruntled employees will not work as well as happy ones. Telling them to suck it up will not go over well, and you need to make a real effort to ensure you align your company’s behavior with that of the one you just purchased.

This is a key part of making the transition a smooth one.

Place Management Correctly:

One of the hardest parts of handling a merger is managing the company afterward. You need to make sure that you are putting management personnel where they need to be.

People shaking hands after a successful m&a integration plan

For example, let’s say you have a department that is prone to weakness after the merger due to confusion with company policies, but another department is already doing what you do on a normal basis.

A poor way of handling this would be to toss your best manager at the department that is performing well while tossing a completely green manager at the struggling department. That sounds obvious, but it happens.

Your management team is an asset. Each member of it is. If you’re going to be distributing your managers across the company in a new way, align them with the needs of the company. Put them where they need to be. Don’t just toss them around like they don’t matter, or you’ll pay for it dearly.

Each managerial staff member has their own strengths and weaknesses, and it’s up to you to match them with the right area for them to succeed.

Monitor Your Progress:

Finally, it’s not enough to set everyone in the places that make the most sense on paper and write it off, you need to be ready to monitor the success of each program in the long term. Is accounting doing well six months after the merger? Is the production team lagging behind schedule consistently? You might have made a bad decision with how you set up management or where you allocated funds.

Don’t freak out if this happens briefly. You’re talking about a major change for every person involved in the merger. The employees are getting used to the change, every owner is getting used to it, and even the investors are a bit frazzled. You should expect a little fluctuation.

However, if it persists or gets extreme, you likely have a major problem on your hands, and it’s likely your fault. Handle it.

This is also a good time to start making your employees cross-functional. The acquisition of a new company means there will be new responsibilities. Try your best to make sure you get employees prepared to handle those new responsibilities along with their normal job descriptions. Obviously, these should fall in line with their current contracts. Don’t make an entry-level employee take on managerial work for the business you just acquired while handling their entry-level tasks as normal. Things need to be aligned in an ethical and reasonable way.

The Speed of Your Transition Matters

This all sounds like a lot to process, and trust us, it is. However, you don’t have forever to do it. You don’t have a year to get all your eggs in a row. You don’t even have half a year. At most, you have 100 days. That is just slightly more than 3 months.

100 days isn’t just an arbitrary number, either. It’s a proven statistic. After 100 days, two main things tend to happen. 

First, your investors are going to get a little scared. They expect a transition period. They know that merging two companies together perfectly doesn’t happen overnight. However, their patience does wear thin very quickly. Around the 100-day mark, they start to get a bit jumpy. If you wait much longer, you might see a few of them pull out and jeopardize your deal structure.

On top of that, you have to worry about your employees. If your business is not a comfortable, streamlined place to work within 100 days, you’re going to start seeing a high turnaround, and that is very expensive to deal with. Even the most loyal employees are not going to stick with you through months and months of rough spots. They have families to feed, and they have lives to grow. So, it’s important to let them know you’re in a transition and have defined an M&A timeline. Then work through that transition as quickly as possible before they start putting in applications elsewhere.

Manage Your Projects

This encompasses a few of the key points we talked about. The projects you started before the merger are still going to be in process, and new projects will pop up as well. You must manage those as smoothly as possible.

If your projects aren’t being pulled off smoothly, your employees are struggling. Employees don’t like to struggle, and we can’t blame them. They are there to earn a living; not support the company’s whims. It is up to you to make the moves, whether they be managerial or policy-based, to ensure that each project is making progress and posing the least problems to your employees.

Make sure that you have a solid plan to tackle your projects, and make sure you can direct every part of your entire team to execute those tasks in an efficient manner. It will boost morale, impress investors, and benefit the company in the long run.

Key Moves to Make Early:

Before we wrap this up, we want to cover some of the moves you should prioritize before you even pull the trigger on the merger. A merger takes a considerable amount of time, and you do have time to get all of this set up beforehand. Don’t waste time. Get it done.

A person utilizing key elements and best practices of an m&a integration plan

Get Your IT Team Involved:

 You will be adopting new technological systems the second the merger takes effect. Your IT team will be your bloodline to make sure that you don’t suffer catastrophic damage while the overall system is adapting.

You should get your IT team into the mix as soon as possible and give them plenty of time to prepare for the big changes.

Pay Your Due Diligence:

You can’t expect this plan to go off without a hitch if you’re not involved to the max. You should be paying your M&A due diligence throughout the entire process. Watch the finances, make sure goals are being met, and take action to correct things that aren’t going to plan.

Mingle:

This one seems really simple, but it’s underrated. Your team will struggle to catch up. This is a big move. Get in the field and talk to everybody. See what their concerns are, if they’re doing well, and just have good conversations with them. Your presence is enough to set their worries at ease, and it makes a major difference in how well the transition goes. Don’t just be a guy behind a desk somewhere.

This doesn’t just go for management. Every employee is part of your team. Talk to them all.

Document Everything:

Throughout the process of your M&A integration plan, take note of everything, and keep a database. Not only will this allow you to catch onto mistakes faster, but it will come later with one of our other key points.

Define Everything:

Your employees aren’t mediocre, but they are used to running on a set path. You can’t just pull the rug out from beneath them and expect great results. Take the time to clearly define every tool, process, and policy that is being used to facilitate this transition, and relay it to every employee. This helps keep them on track, and they stand a better chance of transitioning with ease.

Shorten the Process and Stabilize it Rapidly:

Again, time is of the essence. 100 days is the maximum. You need to work your hardest to complete the transaction as soon as possible. Obviously, you can’t be unrealistic, but you should try to trim as much wasted time as possible from the schedule.

Align Employee Strengths:

Your employees are going to have strengths and weaknesses. It is better for the business and the employees for you to align an employee’s strengths with their tasks. Overall, this will boost the strength of your company.

Adjust Your Market:

You just absorbed an entire company. You took on another customer base, and you might have entered a new market. You need to focus on pursuing that new market because right now, people know your pre-merger audience.

Watch Your Profits:

Your profits might take a brief dive during the merger. You might have scared off a major investor, or you might need to align with a new audience because of it. Either way, you need to protect your profits and get into position quickly to ensure your M&A integration plan goes well. Your profits are what keep your business open and your employees feeding their families. If you lose those profits, it’s a lot more than just a failed business venture. Everyone involved has a lot at stake.

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