Digital M&A

Cloud-based M&A solution for professionals to systematize processes, control deals from identification through integration, and engage all stakeholders. Avoid risks, do better deals, and capture synergies quicker!

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Kicking off the Integration

It is inevitable that some element of information will be withheld from a Buyer pre-deal. Only upon deal close will the Buyer benefit from full insight into the Target and gain access to accurate information on which to base implementation plans. Furthermore, not all the synergy benefits originally identified in the deal will prove to be achievable – the foremost challenge for management at the outset of the PMI process is therefore to identify how value can be captured from the newly combined organization via synergies and cost savings.

The PMI process will likely be complex, time pressured and unfamiliar.

PMI is a complex process – often necessitating changes in a company’s business operations, people, processes, culture and structure. The bringing together of two companies experiencing change (perhaps for the first time) while at the same time ensuring that business continues as usual is a challenge that should not be underestimated and one requiring the upmost level of planning.

Midaxo M&A software - integration task list screenshot

It is important that the PMI process is approached with speed in mind. Investors typically expect to see synergies captured and cost savings realized within 12-24 months of deal close. The longer the PMI process is drawn out the more likely it is that potential synergies will be lost, cost savings and economies of scale will not be realized, management will become disillusioned and key staff will leave.

For most companies PMI is not a core attribute. Rather, it is a process that will be encountered once, or perhaps a handful of times if a serial acquiring is considered. PMI requires a different skillet than is required for usual business operations. The approach taken to PMI depends on the strategic rationale behind the deal and the future intended strategy of the new organization.

Guiding Principles

The PMI process should be set against the backdrop of the deal rationale and aligned to the strategy underlying the deal. Areas which may be considered include:

  1. what the underlying logic of the deal is;
  2. if the deal is to involve the Buyer absorbing the Target or the actual merging of the two entities;
  3. which areas of the Buyer and Target are to be integrated and which are to remain as standalone;
  4. which systems will be adopted – those of the Buyer or a combination of the best from both entities and;
  5. what are the expectations of investors – how soon post-deal do they expect a return and are their expectations realistic given knowledge of the challenges which lie ahead.  

Integration Structure

  • The integration process can be divided into sub-projects taking place before and after the closing (change of ownership);
  • Integration planning should commence as early as possible, but during due diligence at the latest;
  • Day One: first day after change of ownership;
  • First 100 days: the time during when decisions are made and priorities set, so that the organizational structure can be finalized;
  • 12–18 months (transition to line responsibility) during which changes are implemented;
  • 3–6 years are needed for a cultural change (in some parts of the new company corporate culture may never fully change).