Risks of Mergers and Acquisition Integration
An integrated business requires an efficient decision-making system to make decisions, coordinate work streams and set the pace. This should be helmed by a highly-skilled individual with strong leadership and process skills. Perhaps, a rising star within the new company or an executive from one of the acquired companies. Ideally, the person selected for this role should be able and willing to commit 90 percent of their time to this job.
Inadequate communication and coordination hinders integration and prevent the combined entity from achieving quicker financial results. Financial markets are expecting the first signs of value capture, and employees could take the delay in integration as an indication of instability.
In the meantime, the base business must remain a priority. Many acquisitions can generate revenue synergies that require coordination among business units. For instance, a customer product company that was confined to a certain distribution channel might merge with or acquire an organization that utilizes different channels, and gain access to previously untapped customer segments.
A merger may also distract managers from their job by consuming too much attention and energy. The business is harmed. Then, a merger or acquisition may not solve the cultural issues that are which is a crucial factor in employee engagement. This can result in issues with retention of talent and the loss of customers who are important to you.
To minimize the risk to avoid these risks, clearly define what financial and non-financial results are expected from the deal and when. To ensure that the integration taskforces are able to progress and meet their goals on time it is crucial to assign these objectives to each of them.