Complete Guide To Post-Acquisition Integration

60% of CEOs plan to make at least one acquisition in the next three years. Bringing a whole set of new team members and business capabilities represents a tremendous opportunity. However, signing the deal is only the first step. The process of integrating two companies after a merger or acquisition can be challenging yet incredibly rewarding when executed effectively.

In this comprehensive guide, we’ll give you the essential steps and strategies for successful post-acquisition integration. Whether you’re a business leader, an HR professional, or an IT department leader, this is your go-to resource for understanding the critical aspects of post-acquisition integration.

What is Post-Acquisition Integration (PAI)?

Post-acquisition integration refers to the process of combining and harmonizing the operations, systems, processes, and cultures of two companies after an acquisition. It’s the same process that companies follow after a merger deal is signed. When one company purchases another, the goal is to combine the markets, capabilities, and teams into one entity that is more profitable and effective overall. Acquisitions do not add value or create revenue for investors unless the integration is effectively carried out.

PAI is similar to drafting athletes for a sports team. You can sign the best players in the world onto your team. However, if you don’t go through the proper coaching to teach new players your culture, codewords, and game-winning strategies, they won’t integrate effectively into your team.

The Post-Acquisition Integration Checklist

Successful integrations are the result of careful planning. By following the right steps, you can ensure that your acquisition deal delivers real results for your investors and your business.

Set Your Sights On The Target

If you aim at nothing, you’ll hit it every time. This is even more true with complex processes involving many moving parts, like post-acquisition integrations. Experts in mergers and acquisitions have stated that “direction” is one of the most important elements of a successful integration strategy.

Direction involves clearly defining your goals and establishing a roadmap for success. What does a successful integration look like in your case? Define the key metrics and success signals so that you can track your progress.

This early stage of planning involves a great deal of research, commonly known as due diligence. Due diligence refers to the process of breaking down the component elements of each business so that they can be effectively combined. This means analyzing several key elements in both businesses, including:

• Strategic assets
• Technology resources and infrastructure
• Internal structure (org charts)
• Business processes and operations
• Branding and marketing strategies
• Company cultures

It’s also in this early stage that you’ll want to identify integration leaders with the authority and resources to effectively take responsibility for the integration process. This is typically going to be the CFO. When personalities and departments collide, you’ll be grateful to see the effects of executive buy-in pay off.

Ensure Technology and Data Integration Early

Far too many companies ignore the technology and data component of post-acquisition integration. When two companies merge, their IT infrastructures must merge as well. This can be challenging to achieve, especially if one or both of the companies in question have years-old IT departments with hardware and software that have been cobbled together over the years.

It’s one thing to change labels on a door or desk; it’s quite another to combine data from two disparate systems into a single source of truth. Yet, without getting this right, your acquisition is doomed to fail. With different team members using different tools and technologies, your processes and internal communication will break down. That’s why it’s critical to establish and implement tactics to integrate data and technology as early as possible.

From basic office software and communication tools (like email) to more complex systems like customer relationship management (CRM) and enterprise resource planning (ERP) systems, it’s critical to ensure that all technology is integrated so that your organization can function efficiently.

Don’t Neglect Cultural Integration

At the end of the day, companies are just groups of people working together towards a common goal. Different personalities, values, and principles mix together over the years, eventually giving rise to what we call company culture. When one company acquires another, two disparate cultures will need to be reconciled. This is widely considered one of the most challenging aspects of post-acquisition integration.

The challenge comes from the fact that most underestimate the difference between company cultures. Perhaps both companies are software companies interested in providing value to their stakeholders. What’s the problem? However, when you consider that one may have a radically different approach to innovation, risk-taking, and collaboration from another, the challenges start to become clear.

Another element of cultural integration is with internal structure. As different teams and departments are combined as a result of an acquisition, it’s inevitable that some employees will terminated or moved around to different positions in the company. This can distance teams from the leaders they’ve come to trust and require them to follow new departmental heads, creating further cultural challenges.

Avoid cultural friction by making sure your employees are involved in the acquisition process throughout. Regular, transparent communication is key to managing expectations and reducing uncertainties.

Frequently Asked Questions About Post-Acquisition Integration

What is the integration phase of an acquisition?

The integration phase is the phase in which value is created from an acquisition deal by combining and harmonizing the operations, systems, processes, and cultures of two companies. Coming immediately after the deal is first signed, integration involves bringing together the teams, business capabilities, and resources of both companies to create a single, unified entity. Successful integration is essential for realizing the full potential of the acquisition and ensuring that the new business operates efficiently and effectively.

How do you integrate a team after an acquisition?

Integrating teams after an acquisition requires you to get three things right: communication, the definition of new roles, and leadership. Use communication to provide regular updates about the integration process, goals, and expected outcomes to help reduce uncertainty and build trust. Ensure that new roles and responsibilities are clearly defined to avoid possible confusion and overlap. Finally, leaders should be actively involved in the integration process, providing guidance and support.

The Best Way To Simplify Your Post-Acquisition Integration Process

This comprehensive guide gives you the key elements to focus on to help make your post-acquisition process more successful. From the importance of careful planning to the need for early technology integration, it’s critical to build a truly comprehensive integration strategy.

Ultimately, the best way to simplify the integration process is to work with an experienced partner like Cloudficient. At Cloudficient, we use advanced migration solutions and our expert acquisition knowledge to eliminate the most time-consuming steps of mergers and acquisitions. Our team is more than just a service provider. We come alongside you as a partner, listening to your needs and helping you reach your enterprise transformation goals. Wondering how to migrate data and technology as part of a post-acquisition integration?

See what cloudficiency can do for you. Test our technology with a proof of concept in your environment with your users.

With unmatched next generation migration technology, Cloudficient is revolutionizing the way businesses retire legacy systems and transform their organization into the cloud. Our business constantly remains focused on client needs and creating product offerings that match them. We provide affordable services that are scalable, fast and seamless.

If you would like to learn more about how to bring Cloudficiency to your migration project, visit our website, or contact us.