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A post-M&A integration checklist can help your company leaders increase efficiency and stay aligned throughout the integration process.
Mergers and acquisitions (M&A) are commonplace in the world of growing technology companies. An M&A transaction can take many forms, including:
Acqui-hire: A larger company buys out a smaller one in a simplified deal, usually to acquire the talent of that company.
Asset Purchase: A company purchases specific assets from another (software platform, intellectual property, customer lists, etc.) without actually merging the entities.
Stock Sale: One entity purchases another, and everything that comes with it (assets, liabilities, etc).
PE Acquisition: A private equity (PE) firm seeks to roll up companies within a particular industry by acquiring and merging multiple similar companies to make a larger market play.
No matter which type you’re involved with, a successful merger involves aligning the people, processes, and technologies of multiple entities. Many people assume that agreeing to the M&A transaction is the hard part. In reality, actually integrating the businesses and ensuring you can still operate without losing momentum during the transition is equally, if not more, difficult.
An estimated 70-90% of acquisitions fail, largely due to problems integrating the entities involved. This blog, and our Post-M&A Integration Bundle, are aimed at helping you avoid some common pitfalls.
I’ve been a part of multiple mergers and acquisitions throughout my 15+ years in the corporate world – from both sides.
In my earlier career at high-growth startup Dyn, I worked as part of a team to close and integrate several acquisitions ranging in size. Later on at the same company, I helped our DNS company assimilate into tech giant Oracle, which acquired Dyn back in 2016.
Once Dyn was owned by Oracle, I went back to the acquirer side of the transaction and supported operations through the acquisition of a network security company Zenedge. While at TRM Microwave, I supported a private equity transaction. Now as the CFO of York IE, I advise our clients on the various aspects of M&A decision-making, including assisting with VoyageSMS’s acquisition of LiveRecover.
All that’s to say: I’ve learned some valuable lessons from these transactions. While there are dozens of topics within the M&A integration umbrella, this particular post will focus on operational continuity for strategic and business operations post-close.
Let’s go through a general post-M&A integration checklist. Also, be sure to download our free post-merger integration bundle to organize yourself!
What is a Post M&A Integration Checklist?
A post-M&A integration checklist is a document that helps align your teams as you seek to integrate people, processes, and technology after a merger or acquisition. Merging two or more business entities together can feel chaotic. A post-M&A integration checklist helps bring order and sound decision-making to the process.
Post M&A Integration Checklist: How to Integrate a Merger
To integrate a merger, follow these six steps:
Define your gameplan and operating model.
Build your integration team and assign tasks.
Identify and prioritize key revenue-generating areas.
Merge key systems to avoid redundancies.
Communicate changes to stakeholders.
Provide continuous training on new processes.
1. Define your gameplan and operating model
A “traditional” M&A — in which a large company acquires a much smaller one — is relatively straightforward. The small company will generally fit into place within the larger one. However, things become slightly more complex when you’re dealing with a merger of similar-sized companies. What people, processes, and technologies will you keep from each?
Any successful integration process starts with goal-setting and risk analysis. Consider the impact on the business, customers, and stakeholders when making strategic integration decisions. Don’t get lost in the fine details of the integration and miss the big picture.
Identify your key risks. Could employees leave after hearing news of the acquisition? Will clients or users opt for a competitor? Will the backend platform break if you try to transition too quickly? Similarly, consider your opportunities to maintain stability.
It’s important to establish key metrics that you’ll use to track progress as you go.
2. Build your integration team and assign tasks
The whole leadership team of the acquiring company should align on key decisions in the process. This is where a post-M&A integration checklist can help establish some common ground.
Executives should work together to define the top priorities, risks, opportunities, and timeline of the integration. Each leader must then cascade this vital information down to their department leaders to keep the process running smoothly. Delegating is really important in such a big undertaking!
3. Identify and prioritize key revenue-generating areas
This will sound obvious, but maintaining your revenue is one of the most important aspects of any merger or acquisition. The leadership team must ensure that the business can grow its bottom line — even with the whirlwind of transfers and consolidation going on around it.
For example: you can’t simply stop service delivery of your existing platform to integrate a new one. At a minimum, customers need to feel strong continuity in service, but ideally, they’ll have an improved experience with the expansion. Work on maintaining current systems while also developing the new look of the future.
Pro tip: close collaboration with the sales department is necessary to ensure that finance leaders can properly forecast revenue in the changing environment.
4. Merge key systems to avoid redundancies
Theoretically, merging multiple entities under one roof should increase efficiency. But in the early stages, a lack of synergy between the employees, operations, and tech stacks of the merging companies can slow you down. The longer you’re not aligned, the longer you’ll be double-paying for multiple technologies and software platforms.
Identify the systems that are most crucial to your operations, or most expensive from an operating perspective. Focus your efforts on consolidating these technologies first.
5. Communicate changes to stakeholders
A common mantra I’ve learned through many M&As: take care of your people!
A merger or acquisition often includes HR and benefits-related changes for your employee base. These are things that affect their lives outside of work: moving from weekly to bi-weekly pay periods, changing health insurance providers, restructuring the PTO policy, etc.
Try to clearly articulate these changes to avoid blindsiding or alienating any of your talent. Of course, the long-term strategic impact of the transaction should be mapped into your team’s career development. But it’s just as important to ensure the short-term logistical transition is smooth.
6. Provide continuous training on new processes
This also falls under the “take care of your people” bucket. Be sure to provide your employees with adequate resources as you progress through your post-M&A integration checklist.
As an example, set up time with the customer support team of your new payroll software to help answer questions from the accounting team. Or, hold a lunch and learn with the CRO to explain how new sales reps should document their prospect outreach.
Understand that forming new habits will take time. Don’t assume that everything will start clicking smoothly; provide your employees with the tools they need to get up to speed.
All in all, integrating a merger requires a lot of planning and execution. But a well-defined post-merger integration process can help ensure that your business is ready to capitalize on all of the benefits of the merger or acquisition — on a timeline that minimizes overhead and recurring expenses.
Be sure to download our post-merger integration plan bundle to help align your leadership team. Getting on the same page today will pay off when your merger is complete.
