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.
Read this article on: Synergies and Poor Judgement.
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; which are skill areas quite different from the "hard core finance" attitude found in many M&A project teams.
Consequently, a common tendency is to under-prioritize the issues of organization and culture as compared to synergy projects.
But the balancing act is critical!
The following illistration is taken from White Paper #1 which introduces 10 steps to a succesful post-merger integration project.