Last week we dug deep into the second reason M&A deals fail to deliver – Poor Due Diligence.
This week I’m looking at – Integrations Challenges.
Integrating two companies is complex and can be mishandled, including IT systems, manufacturing and service operations, processes, and organizational structures.
This disruption can affect operations and management focus.
Here are some tips to address integration challenges effectively:
1. Build a Detailed Integration Plan:
• Functional and Locational Specifics: Clearly outline “what is staying the same” and “what is changing and when” from Day 1 through the end of Year 1, including tactics, timing, accountabilities, and critical path dependencies.
• Organizational Structure: Define reporting lines, roles, activities, deliverables, and goals.
• Address Complexities: Include how new equipment is sold and delivered differently from the aftermarket activities (including rental if applicable) to support the customer.
• Deliver Synergies: Ensure synergies that drove valuation are realized within expected timelines, setting priorities for each 90-day period and integrating them into the plan.
2. (Over) Communication Plan:
• External Stakeholders: Ensure clear communication with customers, suppliers, and channel partners to avoid revenue loss through the integration period.
• Internal Communication: Maintain consistent messaging and behaviors across execs, management, and supervisors to retain key personnel in both businesses. Walk the talk.
3. Integration Leader and Team:
• Assign a Dedicated Integration Leader: This person will be accountable for the integration project, deliverables, and addressing challenges. This role can be 9-12 months depending on the integration's size and scale. Quarterly updates to CEO and Board are recommended.
• Adaptability: Develop a plan how the leader and the team will adapt the integration approach, pace of change, other to stay on track when challenges arise – because they will.
Integrations are complex and are one of the most difficult things we do to grow our businesses and market share.
Challenges include the intangible - motivating people, engaging people to believe in the vision and the required changes that are being implemented. And we can all agree – these integrations never go ‘to plan’…
I hope you’ll check the blog next week for tips on addressing Cultural Clashes.
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