Incomplete Integrations
Unable to successfully work together after an acquisition as intended
To get value out of an acquisition, the acquiring and acquired businesses are integrated together to some degree. However, the integration is considered incomplete if:
- The project tasks were not finished
- The businesses are unable to successfully work together as intended
There is no definitive way to declare an integration as troubled or incomplete. However, these are some of the typical symptoms:
This is not as bad as it sounds: when a business admits there is an incomplete integration initiative, it is setting itself up for a successful reboot.
Although this is very early in the integration, if no person or team is accountable for delivery, the integration will not be successful
It is OK to have different business cultures: most companies have different cultures between the teams already. However, if the culture differences are negatively affecting the business - and are not addressed - this will cause an incomplete integration
Deadlines can be missed and a delayed completion can be scheduled. However, if there no discussion on when they will restart, it is likely that the initiative will not complete
Leadership must define goals and schedules to achieve those goals. If there is an announcement that there is will be a pause in the integration - and no schedule for a restart, the integration will not be completed.
Critical points in the integration require decisions to be made. If these decisions are avoided, the integration cannot be completed
Integrations cost an average of 14% of the deal price. If no budget is assigned to the integration at the start, it is not being sufficiently supported to be completed.
The customers of an acquired business should be communicated to and updated with changes after an acquisition. Failure to do this will probably cause a drop in satisfaction, leading to a drop in sales revenue
The burden of administration and consensus building will increase. However, the efficiencies of being a larger business should offset this and increase productivity. If this hasn't happened, the integration has not improved the business
Without a dedicated team to set up and manage the integration, the initiative will not succeed
Technology is the life blood of a business. It is critical that the IT systems of the businesses are integrated to a single system of interconnected technologies.
Note that it is not a failure when the post-integration systems are clunky and less sophisticated than prior to the acquisition - but perform as a single system, as the integration was completed.
It isn't necessary for leadership to declare an integration incomplete for it to be the case. However, when employees agree that an integration is a mess, lacking the structure and direction to make a success, it is unlikely to deliver M&A value.
Acquisitions should be able to clearly state what success will look like. The integration is the delivery of this vision. There can be many reasons why the success is not delivered. A reframing of those measures is an indication that the original plan cannot be delivered
Hostility is not a failure, but if it is avoided, ignored or not understood by the acquirers, the integration will fail to be completed as intended.
Acquisitions will have targets or metrics to deliver. The integration is the delivery of them. If these targets are unachievable - and there is no plan to get things back on target - the integration cannot be completed.
Acquisitions will have targets or metrics to achieve, and the integration is the delivery of them. If they are unachievable - and there is no plan to get things back on target - the integration cannot be completed.
Commonplace Areas of Improvement
Despite there being many business-specific reasons for incomplete acquisition integrations, there are commonplace areas that we can look at for solutions. One major challenge is the clash of cultures, either company-wide differences, teams that behave differently, or geographical differences. The merging entities will have distinct identities, values, and ways of working that must be respected.
Good communication is the solution to cultural difference understanding, but poor communication leads to delays. Transparency and clear communication with stakeholders, such as employees, customers, suppliers, channel partners, and investors, are essential. A lack of communication breeds uncertainty, rumors, mis-interpretation of constructive work, and distrust. Ensuring that all parties are informed and engaged can help mitigate these risks and foster a smoother transition.
Larger integrations often include the deliver of synergies as a measure of success - in some cases failure to deliver these can cause irreparable damage to the acquirer and acquired businesses. Delivering synergies while sustaining business as usual needs meticulous planning and execution; otherwise, they can lead to missed opportunities and label the integration a failure.
Sometimes, there is an inappropriate focus on speed of integration, without providing the resources, cross-functional coordination, and communication that can deliver success. Attempting to integrate too much too quickly without capability creates chaos, resistance, and ultimately, an inability to complete. Management teams must be prepared to deliver, realistic in their scheduling, and able to push back on leadership's requests, if they are unreasonable.
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