Post-merger integration
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Post-merger integration or PMI is a complex process of combining and rearranging businesses to materialize potential efficiencies and
synergies Synergy is an interaction or cooperation giving rise to a whole that is greater than the simple sum of its parts. The term ''synergy'' comes from the Attic Greek word συνεργία ' from ', , meaning "working together". History In Christian ...
that usually motivate
mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
. The PMI is a critical aspect of mergers; it involves combining the original logistical-socio-technical systems of the merging organizations into one newly combined system.


Overview

The process of combining two or more organizations into a single organization involves several organizational systems, such as assets, people, resources, tasks, and the supporting information technology. The process of combining these systems is known as 'integration'. Integration Planning is one of the most challenging areas to address pre-close during a merger or acquisition. Even though culture clash between companies can cause integration problems, only 4% of the executives in a survey by Pritchett, LP reported that their organizations include culture-specific questions in their due diligence checklists. Culture specific due diligence may include cultural screening and creating a cultural profile of the target firm. GE Capital conducts a cultural assessment of prospective candidates against metrics such as trust in existing managers, language barriers, and operating processes to then facilitate a culture work out session between both sides. An example of a typical structure for an integration consists of three layers: a steering committee, an integration management office (led by an integration manager) and a variety of additional teams organized by function (i.e. sales, human resources, finance, and information technology, etc.) and/or by business unit, product line, process, or geographic location. More communication to employees is usually necessary during post merger integrations than during day-to-day operations. Fortunately, many of the questions from employees can be anticipated. Achieving successes early in an integration can help build confidence in a deal and quiet skeptics. Common problems that may be encountered during post merger integrations include resistance to change, divided loyalties, issues with employee trust in leaders, blurred roles and responsibilities, unclear reporting relationships, communication tangles, job insecurity, unusual employee turnover, and infighting. 


Organizational lifecycle

Integration fits within an organizational lifecycle or specific business mergers and acquisitions cycle where businesses buy, integrate, then dispose of businesses: * Definition of vision & strategy * Selection of growth method: organic vs inorganic * Target identification * Pre-deal evaluation & due diligence * Negotiation & deal completion * Post-merger integration * Acquisition integration * Ongoing improvement * Disposal


See also

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Mergers & acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspec ...
*
Business acquisition Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
*
Program management Program management, is the process of managing several related projects, often with the intention of improving an organization's performance. It is distinct from ''project'' management. In practice and in its aims, program management is oft ...
*
Project management Project management is the process of leading the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process. T ...
*
Change management Change management (sometimes abbreviated as CM) is a collective term for all approaches to prepare, support, and help individuals, teams, and organizations in making organizational change. It includes methods that redirect or redefine the use of ...
* Corporate finance * Management due diligence


References

{{DEFAULTSORT:Merger Integration Mergers and acquisitions