Post-merger Integration is the “absorption” of a target company’s assets and operations into those of the buyer. It’s a transitory period which begins once a deal is finalized, and can last anywhere from a few months to several years depending on the extent of the businesses of the parties involved.
All takeover and merger deals require successful post-merger integration for the businesses in question to keep functioning normally beyond the transition. The socio-technical systems of the two companies seamlessly fuse together to form one such efficient system.
The Process
The process involves combining everything from the employees, resources and offices to the support software, assets, and so on.
It requires extensive and comprehensive planning, preferably several months in advance. The buyer and the target company need to schedule meetings specifically to plan the integration, well before a deal is announced to the press and the public.
Depending on the condition of the target company, several steps need to be taken during post-merger integration. For instance if a company is generating lower revenue than desired, a buyer would downsize its employees and revise cost management, while investing more in marketing or consultation to help generate revenue.
During this phase, a buyer has to focus on the integration in addition to maintaining the momentum of their own business and ensure all steps taken are within the regulations set by the authorities of their country. It’s a tedious task, one that requires meticulous planning and efficient handling.
Once the integration master plan is ready, it needs to be implemented in a way that makes the new business sustainable in a short period of time. This requires continuous communication between the two parties and the confidence of all their employees.
An Example
An example of successful post-merger integration was when the Spanish banking group, Grupo Santander, acquired UK-based Abbey National in November 2004, a 100-day post-merger integration plan was brought into action five months in advance, to focus on cutting costs to increase their profits once the deal was final. A multi-year plan was then initiated to move back-office systems to Santander’s main site and work on new sales techniques specifically for the UK.
