Post-merger integration or PMI is the process of combining and rearranging businesses to materialize potential efficiencies and synergies that usually motivate

mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...

. The PMI is a critical aspect of mergers; it involves combining the original logistical-socio-technical systems of the merging organizations into one newly combined system.

Overview

The process of combining two or more organizations into a single organization involves several organizational systems, such as assets, people, resources, tasks, and the supporting information technology. The process of combining these systems is known as 'integration'. Integration Planning is one of the most challenging areas to address pre-close during a merger or acquisition. Even though culture clash between companies can cause integration problems, only 4% of the executives in a survey by Pritchett, LP reported that their organizations include culture-specific questions in their due diligence checklists. Culture-specific due diligence may include cultural screening and creating a cultural profile of the target firm. GE Capital conducts a cultural assessment of prospective candidates against metrics such as trust in existing managers, language barriers, and operating processes to then facilitate a culture work out session between both sides. An example of a typical structure for an integration consists of three layers: a steering committee, an integration management office (led by an integration manager) and a variety of additional teams organized by function (i.e. sales, human resources, finance, and information technology, etc.) and/or by business unit, product line, process, or geographic location. More communication to employees is usually necessary during post merger integrations than during day-to-day operations. Fortunately, many of the questions from employees can be anticipated. Achieving successes early in an integration can help build confidence in a deal and quiet skeptics. Common problems that may be encountered during post merger integrations include resistance to change, divided loyalties, issues with employee trust in leaders, blurred roles and responsibilities, unclear reporting relationships, communication tangles, job insecurity, unusual employee turnover, and infighting.

Organizational lifecycle

Integration fits within an organizational lifecycle or specific business mergers and acquisitions cycle where businesses buy, integrate, then dispose of businesses: * Definition of vision &

strategy Strategy (from Greek στρατηγία ''stratēgia'', "troop leadership; office of general, command, generalship") is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. In the sense of the " a ...

* Selection of growth method: organic vs inorganic * Target identification * Pre-deal evaluation &

due diligence Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. Due diligence ...

* Negotiation & deal completion * Post-merger integration * Acquisition integration * Ongoing improvement * Disposal

References

{{DEFAULTSORT:Merger Integration Mergers and acquisitions

Overview

Organizational lifecycle

See also

References