Merger Integration Challenges

By James A. DeLeo, MBA, CPA/MST
Leading Partner
Gray, Gray & Gray, LLP

In an overabundance of eagerness to get a deal done, some companies looking to make an acquisition in the M&A market might lose sight of the critical need to successfully integrate the new business post-merger. There are many challenges to be surmounted if that shining M&A deal is going to pay off in long-term growth and expanded market share. Planning for the post-merger integration should start with the first inkling of a deal and proceed in parallel with your due diligence and negotiation process. Here are four potential integration problems that could sour an acquisition if not addressed up front.

  1. Starting the integration too late. If you wait until the ink is dry on the acquisition documents, you have fallen way behind the curve. The day after the deal is done is too late to start thinking about how the pieces will fit together. Know in advance what parts of the newly merged business can be transferred whole, which need to be adapted, and which can be scrapped.
  2. Making the integration too complex. You can’t expect every aspect of two dissimilar businesses to merge seamlessly from day one. Yet some business leaders try to force the issue and align everything right away. Instead, prioritize what is most important and tackle that first. Less important processes and systems can wait.
  3. Ignoring what works. There is a natural tendency to be biased toward the operational and business practices with which you are familiar. This can result in a push to change the ways the acquired company works to fit your model. But don’t be too quick to dismiss all that they do, as there may be some systems that merit adopting, rather than adapting.
  4. Forgetting customers. Finally, avoid focusing all of your attention on how the integration will work internally. There is a danger that some of the decisions made to speed the assimilation of the newly expanded organization may negatively impact customers, a mistake you can ill afford to make. Similarly, keep an eye on how the merger will impact your vendors, financial relationships, and supply chain partners.

M&A can be a strategic part of your company’s growth and expansion plans. But taking the time to plan ahead is vital to maximize the value you receive from each acquisition.

Jim DeLeo is the Leading Partner at Gray, Gray & Gray, LLP and Co-chairs the firm’s M&A consulting practice. He can be reached at (781) 407-0300 or jdeleo@gggcpas.com.

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