Risks of Mergers and Acquisition Integration

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A strong decision-making system is required to take decisions, coordinate work streams, and set the pace for a fully integrated company. This should be led by a highly skilled professional with a strong leadership capability and a process, possibly an emerging star in the new organization, or a former leader from one the acquired companies. The person chosen to fill this position must be able to devote 90 percent of their time to this task.

A lack of communication and coordination will slow down the integration and rob the combined entity of faster financial results. Financial markets expect significant and early signs of value capture, and employees may see delays in integration as an indication of instability.

In the meantime, the core business must remain the top priority. Many acquisitions create revenue synergies that require a significant coordination between business units. For example, a consumer product company that was confined to certain distribution channels might join or acquire an organization that utilizes various channels and gain access to untapped consumer segments.

Another issue is that a merger can soak up too much of a company’s energy and attention which can distract managers from their business. As a result, the company is harmed. A merger or acquisition might fail to address the cultural issues that are vital to employee engagement. This could lead to issues with retention of talent and the loss of key customers.

To avoid these risks you must clearly identify the financial and non-financial results that are expected and by when. Then, delegate these goals to the different integration taskforces to drive momentum and deliver one integrated company according to schedule.