What is Acquisition Integration?
(AKA Post-Merger Integration)
After you Buy a Business, You have Two Businesses
Usually smaller businesses are bought for their future potential, not the current status, that are part of an efficient larger business. This will grow into its envisioned future and achieve this potential. Just as an acquisition is not "Just Buying a Business", an integration is not just combining two or more businesses.
Integration is the thoughtful alignment of disparate people, processes, operations, technologies and cultures in the pursuit of added value.
After an acquisition, we own what was someone else's business. The handshake at the close of the deal does not automatically transform our purchase. What we envision for our new business now has to become whole.
When we integrate (or "merge") all or parts of the businesses together, the process is known as "Post-Merger Integration" (PMI).
Creating a larger harmonious business
To create this opportunity for growth you will need a larger well-functioning business. Forcing the consolidation of teams and operations, without consideration of the effect upon the business culture, will have a long-term effect upon its trajectory.
The integration of smaller businesses requires a focus upon the people who make up that business, as they are a significant portion of its value.
With smaller businesses, how you integrate is as important as what you integrate
The integration includes assessing, planning, budgeting, supporting and training, to deliver the value that the Deal Team envisioned
People
Technologies and Products
Operations
Processes
Business Cultures
The Complexity of Post-Merger Integration
When you integrate businesses, you combine and transform the businesses by:
- Addressing these 5 important areas
- Accommodating different structures and functions
- Sustaining the revenues
- Allaying employee concerns who are unaccustomed to lots of change
Every business has its own unique combination of the five areas, e.g. the org chart, manufacturing, and revenue generation. Within a business, it is possible that each team, department, or office would have its own variation of the areas.
The Challenge Ahead
The challenge of acquisition integration is to merge together two businesses and all of the teams within them, with all of their unique characteristics - while simultaneously maintaining the revenues, retaining the staff, sustaining productivity, running processes, and servicing customers.
A 30% Success Rate
The success of mergers and acquisitions has been measured* since the 1970s. Unfortunately, the data is not related to the transactions; it is the integration of acquired businesses that often fails. Delivering what was envisioned when the deal was put together is difficult. Once the transaction has taken place without foreseeing possible problems and money has exchanged hands, an unplanned integration is prone to failure.
What is the value of an acquisition, without integration?
Delivery of a well-planned acquisition integration will increase the value of your business, enable it to grow more quickly, giving a greater return on investment (ROI).
Businesses that do not successfully integrate acquisitions waste the opportunity of value creation. With every subsequent acquisition, the pain of not integrating becomes greater, as the burden of multiple processes, tools and operational methods prevents growth.
Intista's integration success rate is 90%
*Joshi, M., Sanchez, C., & Mudde, P. (2020). Improving the M&A success rate: Identity may be the key. Journal of Business Strategy, 41(1), 50–57. https://doi.org/10.1108/JBS-08-2017-0115
Dr Kelvin Mukolo Kayombo, (2019), Critical Assessment of Performance of Mergers and Acquisitions , The International Journal of Business Management and Technology, Volume 3 Issue 1 January - February 2019
Find out how we train your employees to be your in-house integration teams
5 Reasons why businesses want Certified Integration Managers
1. A successful integration team delivers the value defined by the Deal Team
- Incomplete integrations are missed opportunities to realize the value envisioned by the deal-makers
- Integration of the two businesses, not the purchase, is what delivers value
2. In-house expertise, which is transferred between successive acquisition integrations
- Create an in-house acquisition integration team, using the knowledge of established experts
- Invest in your team, and transfer experiences between successive acquisition integrations
3. Control the cost of getting external integration expertise
- Know the cost of the training and certification, up front
4. Improve the way that you approach and deliver integrations in the future. If you already acquire and integrate, avoid the cost of inefficient methods in:
- Staff retention
- Faster onboarding
- Improved productivity
- Staff engagement
5. Trained employees are happier employees
- Certified employees perform faster, are more engaged, and have better work outcomes*
- Organizations that invest in employee training demonstrate that they have faith in that employee and morale improves
- Improved morale creates more engaged employees, which makes them more productive
Conquer operational performance challenges in acquired businesses
Intista’s Certified Acquisition Integration Manager™ program applies our proprietary Small business Simplified Integration Method (SSIM™) which establishes a repeatable process to improve integration efficiencies.
Develop your company’s in-house acquisition integration expertise and capabilities through our Certified Acquisition Integration Manager™ (CAIM) program.
Our CAIM program covers how to plan, announce, and run the integration of an acquired lower-mid or mid-size.
Learn More from Our Blogs
When Should you Begin Integration?
If your business growth strategy is acquisition, and you want to get
The Many Ways to Integrate an Acquisition
Acquisition integrations are when the parent company takes over the target (acquired
Acquisition Integration and the IoT
One of the biggest changes that is happening in society, in my