Risks of Mergers and Acquisition Integration

A strong decision-making framework is needed to make decisions to coordinate work streams and establish the foundation for a fully integrated company. This should be supervised by a highly experienced individual with strong leadership skills and processes, perhaps an emerging star in the new organization, or a previous leader from one of the acquired companies. The person selected to fill this position should be able to commit 90 percent of his or her time to this task.

Lack of communication and coordination could slow the process of integration and deny the new entity of accelerating financial results. Financial markets expect the first signs of value capture, and employees might consider delays in integration as a sign of instability.

In the interim the core business needs to remain the top priority. Many acquisitions can create revenue synergies that require coordination among business units. For instance, a customer products company that is restricted to a few distribution channels could join with or acquire companies that use different channels and gain access to previously untapped customer segments.

A merger may also distract managers from their work by taking up too much attention and energy. The company suffers as a result. A merger or acquisition might fail to address the cultural issues that are essential to employee engagement. This could lead to problems with retention of employees as well as the loss of key customers.

To avoid these risks be clear about what financial and non-financial results are expected from the transaction and when. To ensure that the taskforces for integration are able to progress and meet their objectives on time it is crucial to assign these objectives to each of them.

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