Acquisition integration is the process of combining the operations and systems of an acquired business with those of the acquirer. This is needed so that the acquirer can achieve benefits from its acquisition as soon as possible.
There are a number of steps involved in acquisition integration, which include the following:
- Appoint an integration manager. Assign the integration task to one of the acquirer’s managers who has significant experience and seniority within the company. This person is assigned to the project on a full-time basis, and is expected to reside near the acquiree for as long as the integration process takes to complete.
- Appoint an integration team. The integration manager selects a group that has expertise in all of the areas requiring integration, such as information technology, marketing, and accounting. This group is assigned on a full-time basis, so that they will not be distracted by their old jobs.
- Issue any bad news. If there are to be layoffs or job reassignments, say so at once. Otherwise, the rumor mill at the acquiree will run at full speed, and will massively impact the productivity of employees. This will likely require having several meetings to inform all affected employees.
- Address key personnel. The most critical employees of the acquiree are probably looking elsewhere for jobs, or are being called directly by competitors. To reduce the number of losses, meet with these employees to reassure them regarding their employment status, and decide whether any inducements should be offered to retain them.
- Determine the culture. Every acquiree has its own internal culture. Ascertain the nature of the environment that causes this corporate culture, and decide how much of it to retain. If the existing culture is considered critical to the functioning of the acquiree, this can strongly impact the amount of change that can be imposed. In an extreme case, the integration manager may conclude that an acquiree will function best if left entirely to itself, or perhaps with only minor changes.
- Follow a conversion plan. When specific changes have been identified as part of the due diligence process, incorporate them into a master conversion plan. This plan should include specific due dates and assigned responsibilities. The integration team should closely adhere to this plan when engaging in integration activities.
- Add to the plan. As the team engages in integration activities, it will find additional opportunities for improvement, which should be included in the conversion plan. This will likely result in a continuing series of plan modifications, perhaps on a daily basis.
- Measure results. As the integration process proceeds, compare the actual results achieved to the initial expectations for revenue enhancements and cost reductions. Also, measure the timeline over which these gains have been achieved, and especially in comparison to the timeline of the initial plan.
- Spread best practices. If an acquiree has developed best practices in certain areas, identify them and spread them through the rest of the company. This can require the use of a formal distribution mechanism, such as a best practices council that meets to discuss the dispersal of best practices through all company divisions.
- Feedback loop. Once an integration has been completed, the team should meet to discuss what went well and what went wrong, and to document these items. The information can then be used to enhance the acquirer’s next integration process.