Post Merger Integration Process: A Complete Guide

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post merger integration, m&a integrations, merger integration checklist, post merger

Post-merger integration plays a huge role in the deal outcome — whether it’s going to be successful or not. Disorganization in the procedures may lead to an officially executed deal on paper, but in reality, the new business entity is in a state of disarray.

That’s why the planning stage of post-acquisition integration needs to begin early on in the proceedings. It’s also important to have frameworks, guidelines, and teams determined beforehand to help avoid any issues.

What happens when the deal nears closing?

When you think everything is done, you should also keep in mind that there will be challenges after the deal is closed. Here is where the post-merger integration introduces some issues, which may lead to problematic outcomes. 

It’s important to realize that planning for M&A integration is equally crucial as any other stage of the merger and acquisition. Proper preparation and implementation of the best methods will increase the potential of the newly-formed business entity. 

What is post-merger integration?

M&A integration, also called post merger integration (PMI) or post-acquisition integration, appears when several firms combine to maximize synergy, meaning to increase their market value and broaden their client base. 

Why do you need an M&A integration plan?

M&A integrations processes should involve thorough analysis and planning. Here is how the post merger integration plan template should look:

  1. Defining goals and directions. The first step in M&A integration planning is identifying goals, which may also change throughout the deal process. This also helps to form independent teams around those goals.
  2. Creating the PMI framework. This step requires clarified guidelines and instructions, which will guide the teams throughout the PMI. During the all-important initial meeting, integration details should be introduced and explained to the various work teams.
  3. Organizing the post-merger meeting for the teams. Once the new organization has been created, and business operations are set, it’s time to review integration goals and to evaluate post-merger progress.
  4. Supporting communication. Establishing and maintaining communication channels as well as creating a system for frequent reporting will help smooth out any wrinkles in the integration process.
  5. Final review. During the final review stage, PMI is reevaluated. At this time, teams are realigned with organizational goals and are introduced to new details and additional information.

Additional steps for better outcomes:

  1. Due diligence. This process is not a part of the M&A integration, however, professionals still recommend using the data room for the due diligence phase and integration planning.
  2. Pre-close synergies. It’s important to analyze and approve the pre-close synergies, which will serve as the objectives for leaders’ commitment. At this phase, teams should be formed, and team leaders appointed.

Post-merger integration checklist

Preparing for an M&A may be a bit overwhelming, as there are many aspects to focus on. A post merger integration checklist will help to create an agenda and keep processes organized. It ensures that different teams are kept updated and well-informed about items to be completed.

The post acquisition integration checklist includes all functional areas to be discussed during the entire integration process:

Hiring and performance
  • Short and long-term demands

  • Systemization of the benefits/compensation and payroll setup

  • Training plans and migration of employees

  • HR systems Securing top employees

  • Organizational design

  • Headcount synergy analysis
  • Technology
  • Creation of new organization chart and merging systems

  • Infrastructure setup
  • Finances
  • Financial close

  • Banking strategy (opening and closing of bank accounts)

  • Financial management strategy

  • Opening balance sheet
  • Legal
  • Regulatory approval and HSR guidelines

  • Legal entity rationalization 
  • Marketing and sales
  • Brand rollout timeline

  • Communication with old and new customers

  • Client contracts

  • The preparation of marketing operations 
  • The post-merger integration checklist is a detailed plan on what should be done. It includes divisions and teams, so at the deal’s critical stages, everything is prepared to be handled quickly.

    • Tip: assign each item on the checklist to an individual — make them responsible and hold them accountable.

    Types of post merger integration

    The types of post-merger integration include:

    1. Absorption. This occurs when the acquiring and target companies blend their processes and integrate them into the new organization.
    2. Symbiosis. Harmony and teamwork help to achieve M&A objectives.
    3. Preservation. The target company is left autonomous. Still, the financial processes and information need to be integrated with the acquiring company.
    4. Holding. The acquiring enterprise becomes the sole owner. However, the two organizations operate independently, so integration is not required. 

    How much time is required for post integrations?

    Post-deal integration doesn’t have a specific time frame. There are various aspects that may appear throughout different stages of the deal that may influence the time required to integrate. 

    Deals can be very different, so the post-acquisition integration can take months or even years to complete. The amount of detailed preparation beforehand may increase the speed of the post-deal process as well.

    Using a virtual data room as a post-merger integration tool

    If you don’t want to make common mistakes that could kill a deal, you should use certain tools to fit the team’s requirements and needs. 

    Using data room software during the M&A process allows you to plan everything properly and manage all documentation simultaneously. A VDR is amazing for collaboration and communication between team members, so some processes can be completed faster.

    Here are some of the reasons why you should use an online data room for PMI:

    • Time efficiency

    As previously mentioned, post-merger integration can take up to several months or even years. A VDR, with its great management and collaboration features, helps teams to avoid duplicate work.

    • Progress tracking

    In the data room, there is a dashboard where you can see who is working on a specific task. You also have tracking features, which allow you to see how much time is spent on each document or task.

    • Fast collaboration

    Features like the Q&A section and written comments in the document ensure that you are communicating with other users in one place. This also saves time, as you don’t have to switch to email or other tools.

    • Better organization

    Indexing and a keyword search feature help you to find the information or document quickly.

    VDR software provides all features needed for planning and then completing the integration of companies after acquisition. With documents stored in one place, users can quickly notice if there is something of concern before the actual problem arises.

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