Post-Merger Integrations (PMI): Synergy Capture and Cultural Integration
PMI (Post-Merger Integrations) represent a project domain characterized by non-obvious priorities and high-impact pitfalls. Consequently, PMI is more experience-correlated than other types of M&A projects – and quite different from the "financial analysis" parts of a regular M&A process.
The Need for a Balanced Approach to Post-Merger IntegrationsIn order to be successful, post-merger integrations need to focus on a balanced set of priorities – from hard-core synergies to the practical combining of two different corporate cultures. This "hard-soft" approach is critical in order to reduce acquisition risk. Failed acquisitions or mergers are typically explained by a lack of integration focus – with weak attention to organization and cultural issues as the most fundamental causes of failure. Why?
Synergy Capture vs. Cultural IntegrationSynergy capture is an obvious focus area (but not a very challenging one to solve), requiring mostly an analytical skill-set. It is more difficult to handle the increased intricate issues related to organizational resistance and "us vs. them" attitudes. Consequently, the usual tendency is to under-prioritize these areas when compared to synergy projects. But a balancing act is critical.
The following illistration is taken from White Paper #1 which introduces 10 steps to a succesful post-merger integration project.
For a full web version of this white paper, see the article: On Synergies and Poor Judgement. A shorter web version is provided in this LinkedIn article.
Special Requirements in ScandinaviaIn Scandinavia, a balanced approach to integrations is of particular importance, since organizations are characterized by large degrees of autonomy and delegated decision making – and because employees require and demand attention to a broader set of issues than those typically found when executing mergers in other cultures.
Other Relevant Articles
See Download Center: White Paper #1: Post-Merger Integrations - About Synergies and Poor Judgment; White Paper #3: Strategy and Implementation - and the Lack of Results; White Paper #5: Buy-Side M&A (mergers and acquisitions); White Paper #6: Sell-Side M&A (divestitures, trade-sales and mergers); White Paper #7: Should You Choose Financial or Industrial Investors/Owners?; or White Paper #9: A 15 Step Recipe for Developing Your High-Quality Business Model.
- 10+ post-merger integrations (PMI) projects across Europe. Focus on merger situations requiring speed and precision balanced with synergy capture, profit improvement, strategy alignment and attention to cultural sensitivity.
- Business unit core size of US$100-1,000M.