Wednesday, August 10, 2022
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Home Business Post-Merger Integration Plan: How to Avoid an M&A Integration Disaster?

Post-Merger Integration Plan: How to Avoid an M&A Integration Disaster?

by Intizar Ali
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Global Market

The global marketplace is becoming increasingly competitive with the penetration of countless SMEs and digital-only start-ups. Larger counterparts, on the other hand, have started acquiring these budding businesses that show a potential threat to their existence – a phenomenon that has greatly fuelled global mergers and acquisitions over the past few years.

What Is Post-Merger Integration? 

Post-Merger Integration (PMI) refers to the integration of two companies after a merger or acquisition. This process involves combining everything from teams to data in pursuit of a synergy that would allow the standing entity to meet the predicted value (from the M&A deal).

Why Is a Post-Merger Integration Necessary?

According to a Harvard Business Review study, over 70% of M&As fail, with failures in Post-Merger Integrations (PMI) regarded as one of the most fundamental causes of this statistic. An article by Deloitte seconds this by stating that “one of every two PMI efforts fares poorly.” Loss of critical data while integrating two or more databases is among the primary reasons for PMI failures, which is why pre-building a post-merger integration plan is vital.  

How to Create a Post-Merger Integration Plan?

An article by McKinsey states that businesses should start building their post-merger integration plans while the M&A deal is being agreed. However, the challenge remains creating a PMI plan itself. 

Thriving enterprises break their post-merger goals into systematic steps to execute as the M&A deal goes through. We have discussed these steps in detail below.  

When to Start Post-Merger Integration? 

It is vital that your PMI plan is in place before the M&A deal is closed because the execution phase must begin right after the deal is announced. A delay in commencing the integration process can impair key business functions due to inaccessibility of data, and lack of direction. 

Step by Step Post Merger Integration Plan

The decision to combine or take over an entity requires extensive homework. The following is a brief step-by-step guide that will provide you with a head-start:

1. Keep a Post Merger Integration Budget

Post-Merger Integrations can cost a lot: from synchronizing systems to removing redundant data and securing data transition streams, any step can create unforeseen hiccups, translating into increased expenses. Businesses need to pre-determine a realistic budget prior to the M&A itself in order for their PMI efforts to go seamlessly. This budget should be put under a separate head while budgeting, so the allocated amount (for post-merger integrations) is not jumbled into other M&A expenses.

2. Create PMI Managers

Timely recruiting of a Post-Merger Integration Manager is critical to the project’s success. Mike Shelton – a McKinsey consultant, identifies integration managers as driving wheels of a PMI process.

CEOs must appoint these managers about a month before the M&A is announced so they are able to equip and identify tools and resources that may play a critical role in seamless PMI integrations. It is advised to get post-merger leaders from both of the entities as soon as the merger news is announced to reduce buffer time.

3. Build a PMI Timeline

Although PMI times vary in each merger, it is essential to execute the initially built PMI plan as soon as the M&A deal is announced. An ideal timeline should be spread out between two-three months i.e., the PMI plan should be executed by the next quarter. 

Begin by setting tentative yet realistic timelines for budgeting, hiring PMI managers, deploying dedicated teams, and realigning data processes to power through the integration phase. 

4. Have a Clear Post-Merger Objective

Different organizations have different post-merger objectives. Some business-owners work towards an increased market share while others focus on accessing critical client data to build a solid competitive stance.

Having a clear post-merger objective will help enterprises determine the areas they need to focus on while integrating data. However, acquiring all types of data from different functional areas of the acquired company is critical to the new entity’s future.

5. Realign Data Processes

Integrating IT systems and data processes is among the biggest challenges in post-merger integrations, especially if there is a legacy system in the picture. During the PMI phase, enterprises need to leverage legacy systems of the acquired entity by modernizing, realigning, and streamlining its processes with their existing technology. 

It will require expert assistance and dedicated teams to get this job done to perfection. Such teams will also assist in integrating data from multiple databases, like MySQL and Oracle, into a single platform. Data integration companies like Astera play a vital role in this area.

6. Deploy M&A Integration Units

Powering through the integration phase after an M&A requires dedicated teams. Team members can be deployed from either of the entities and tasked with assisting PMI Managers in the entire integration process. While integration teams work on combining the two enterprises, the remaining pool of talent can focus on core business-generating activities to ensure seamless operations.  

How Astera Solves Post Merger Integration Problems?

Astera Centerprise Data Integrator is designed to provide enterprise-ready data solutions that help organizations gain relevant insights, solve data discrepancies, and extract relevant information, all within a single codeless platform. It also saves time during job scheduling by minimizing manual effort through automated trigger-based tools.

Centerprise Data Integrator eases PMI integrations by providing a simple interface to flatten the learning curve for new users. It turns complex integration tasks into drag-and-drop actions while consolidating data from disparate sources. The software further spots and eliminates duplicates, errors, and redundancies in the consolidated data, thereby leaving users only with relevant data at hand.

In addition to simplifying complex workflows and synchronizing systems, Centerprise Data Integrator by Astera also offers a reasonable TCO compared to other market-leading solutions. Enterprises can acquire this software at a favourable price-point with 24/7 tech-support and affordable product license renewal charges.

In a Nutshell

One of the biggest challenges that entities face is achieving forecasted value from their merger or acquisition. Reaching the goal requires extensive work in the emerging entity – maintaining quality in merged data, retaining vital information, and creating point-to-point connections for key processes in both companies, etc.

Software like Astera Centerprise are built to remove all this hassle, and ensure a seamless post-merger integration of data and workflows, reducing the probability of an otherwise potential M&A disaster. You can learn more about the software by visiting Astera.com.

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