Four Tips for Successful Merger Integration

When you’re a PE firm acquiring a company, you may have an outcome you want to achieve. RSM US LLP partner Greg Maddux and principal Christina Churchill outline four concerns to be aware of so your acquisition goes according to plan.

1. Start Early, and Follow Through

Also start with a well-defined strategy, where the real value is

Operating partners and the companies they’re guiding often don’t realize the effort required to realize true integration goals. “Sometimes they’re just busy with day-to-day operations or are moving to the next deal,” RSM’s Greg Maddux says. “Unless you have a group focused on integration, with clear accountability and targets, there’s the risk that it won’t get fully accomplished, or it will get done more slowly. Accelerating results creates real value faster.”

2. Be Able to Work Through Functional Challenges

Not all acquisitions are created equal

“When you have a merger of equals, the complexity goes up,” Maddux says. He further expands on that thought, noting that in a major acquisition where a good-sized company is acquired, the stakes are even higher. For example, one manufacturing company owned by a PE firm acquired one of its competitors, and that company’s owner-operator stayed on to assist with customer and supplier transition. However, the culture of the acquired business was much different than the buyer’s. “It became bogged down,” Maddux says of the merger. “The other executive had another objective. But he [also] had such a huge relationship with buyers and customers. The importance of being able to work through these types of integration challenges should not be underestimated.”

3. Be Strategic

Take a step back and look at all of the merger’s moving parts

It’s important to envision what impacts the integration will have on the customers, vendors, employees, competitors, and stakeholders of the companies involved. For example, “rationalizing your vendors, doing cost savings—it’s really a chance to go back in and look at things,” RSM’s Christina Churchill says. By doing that, you can negotiate changes with your vendors that could create savings, she notes. There may also be areas in the merging companies to look for software solutions, such as redundancies in programs or tools that are doing the same thing, and combine it across the whole organization.

4. Look at the People, Processes, and Technology

A balance among them is crucial to the success of a merger integration

A company will be at its most profitable when all three of these work well across the organization, says Churchill. People may not be in the right seat at an organization, and an operating partner can address that. “You should look at who you have,” she explains. “How do we streamline things? How do we make sure we get actionable data quicker across the organization?” The technology component is also key. “You want to have the best tech for the combined organization, be able to convert your data in the best way, and be able to provide reporting. If you’re able to operate in the best way possible, you’re not impacting customers across the organization.”