M&A Integration Strategy and Planning

1. Autonomy: Acquired company retains its independence.
2. Best of Both: The best policies, procedures, processes are selected from each company are implemented.
3. Transformation: Both companies operate in a fundamentally new way.
4. Absorption: Acquired company conforms to parent.
5. Reverse Merger: Acquirer adopts the acquired company’s processes.

Acquirers often employ a hybrid of the above strategies on each of their integrations. For example, they may integrate the acquired company’s back office (Absorption) but leave its R&D operation alone (Autonomy).

A playbook is a how-to step-by-step operating manual for an M&A integration. It clarifies what needs to be done, by whom, and by when. Plus, it defines the integration team processes for governance, reporting, communications, and risk and issue management. Effective playbooks bring consistency, predictability, and reliability to the integration process and shorten the learning curve for team members.

From M&A Integration Playbooks.

Planning should start two to three months before close or when the letter of intent is signed, whichever is earlier. It is difficult to deliver a smooth, effective Day 1 and achieve quick successes without adequate pre-close planning. Starting early creates the momentum to integrate after close.

During the initial step, executives agree on the integration's strategy, guiding principles, objectives, assumptions, and non-negotiables. The integration plans will draft of the direction set by senior management so there should be early discussions to identify and resolve divergent opinions

From Step 1: M&A Integration Video.

An integration plans identifies the integration tasks, and the owners, timing, risks, and dependencies associated with those tasks. A plan should always include these 5 elements:

1. End States - Integration complete" should be defined. If it isn’t, teams will feel like they are in a race without a finish line.
Related presentation: End-State Transition

2. Governance - Determine the integration hierarchy, decision-making protocols, and escalation routes so problems requiring senior-level input can be quickly addressed and resolved.
Related presentation: Post-Merger Integration Framework

3. Communications - Planning communications in M&A takes much more effort than it does under more stable circumstances.
Related playbook: Day 1 M&A Playbook: Employee Communications

4. Tasks - Each task in a team’s plan should have an assigned owner and start and completion dates.
Related playbook: M&A Integration Playbook

5. Early Wins - Acquirers can help silence the skeptics by achieving goals that provide hard evidence the merger is rapidly bringing benefits.
Related article: Engineer Early Success in Your Merger

From The 5 Critical Elements of an M&A Integration Plan.

The end state is the point at which the integration teams will disband. When teams struggle to complete their plans, it is often because their  end states have not been determined.  They do not know what they are integrating to. There is no defined finish line.

A 100-Day Plan includes the steps, their timing, and the necessary resources to achieve the integration objectives for the period ending 100 days after the close of the deal. The development of this plan should begin before close, no later than when the letter of intent is signed.

From 100 Day Integration Plan.

1. “We will not make any changes.”
Why wouldn’t you? During a merger or acquisition, people are primed for change. They expect it. So, you should use this window of opportunity to make needed changes.

2. “This is a merger of equals.”
The phrase gets misinterpreted. Employees decode it to mean that both companies will be treated as equals so far as integration decisions are concerned.

3. “We plan to take the best of both.”
This won’t happen. It never happens. It’s an idealistic statement and you simply will not be able to deliver on it.

4. “It will be business as usual.”
No way. At the very least, being acquired or merged changes things psychologically. It affects people’s perceptions, their career outlook, as well as corporate politics.

5. “The cultures of our two companies are very similar?
Perhaps so. But people will focus on the differences. Being human, they’ll aim their attention toward those cultural flash points where the two companies’ behaviors and beliefs don’t align.

From Five Things You Should Never Say in Announcing the Deal.

The acquirer’s opening moves are critical because first impressions can be lasting impressions. Acquirers need to get out the gate cleanly. How you begin the integration process carries heavy influence over how you will finish. 

From The Power of Opening Moves.

That depends on the rationale for the deal. For example, if an acquisition is being made to achieve economies of scale, then a full integration may be the best approach. However, if the deal is done to expand into new regions or acquire new talent, then the best way to create value may be to selectively integrate in only areas that overlap.

Usually, it is. When merging companies announce their deals are a “merger of equals,” it creates confusion as to who is calling the shots. The attempt to build a consensus on every issue slows down decision-making and momentum. In reality, there is no such thing as a "merger of equals" because there is always someone in charge who has final say. Power is never distributed equally.