Monday, February 15, 2010

Rapidly Integrating an Acquisition

Note:  This is a follow-up to an earlier post on preventing an acquisition from becoming a distraction (located here).

Over the last decade, acquisitions have become very common in the world of business.  With all the collective experience gained from the enormous amount of M&A activity that has taken place, you would think the process of integrating a newly acquired company would have been perfected.  Unfortunately, this is not the case.  Studies continue to show that up to 70% of M&As fail to meet expectations in terms of financial performance.

There are a variety of reasons for making an acquisition, but all relate in some way to benefiting the acquiring organization.  With this in mind, the longer it takes to integrate the newly acquired company, the longer it will take to reap the benefits of the transaction.  The process of assimilating the new organization needs to be planned and executed with at least as much care as the due diligence process, and quickly enough to prevent the acquisition from becoming a distraction to the business.

The Focus of the Process

Integrating an acquisition requires focus on the technical (processes, systems, etc.) and human elements.  Although the technical element often gets most of the attention, it is the human/cultural issues that cause most of the problems.  In fact, the majority of technical issues could be handled much more easily if enough focus is given to the human element of the integration process.

This post will deal with the human aspects of acquisition integration with specific attention to two areas:  fear and alignment.  With serious and proper focus on these areas, integration can be done quickly and with surprisingly few problems.


Fear is an obvious by-product of any acquisition.  Mergers almost always lead to job losses, and it is most often the acquired company that loses the most jobs.  With this in mind, the integration plan needs to include honest and open communication about potential job cuts, as well as some type of bonus for those who stay until the end of the process.  Ignoring this subject will serve to demotivate employees, break down teamwork, and increase the length of time it takes for full integration.


Alignment refers to indoctrinating those in the newly acquired organization with the purpose, values, and focus of the parent company.  Indoctrinating the new team members with this focus clarifies expectations quickly by communicating to the employees of the acquired company that they are now part of a new, larger, and different organization.

The Integration Plan

Just like any change initiative, integrating the acquisition needs to follow a carefully developed plan with a responsible person leading the effort.  The process must include frequent reviews with senior leaders to assure that problems are addressed quickly and effectively.

Specifics of the plan will differ depending on the size, type and culture of the company, but need to include the following components:
  1.  Indoctrination with Purpose & Values (Alignment)

    Time must be spent discussing the fundamental purpose of the company (mission and vision) and how they will operate (values).  Every organization is different and integration will most likely involve some type of shift in purpose and values.  I have found that this is best accomplished in two phases.  First in a general message from a senior leader (preferably a C-level executive), and followed up by smaller group discussions led by a function leader and HR representative.

  2. Leadership Coaching (Alignment)

    To protect the organization's values, it is important to work with leaders at all levels of the acquired company to assure they possess the values of the acquiring company.  A good amount of coaching will most likely be required to give those who don't display the values a chance to modify their behavior and leadership style.  Obviously, some people will need to be replaced when it is determined that they are not capable, or do not desire, to change their style to fit in the new organization.

  3. Employee Survey (Fear)

    A survey of existing and new employees can provide information about the fears, concerns, frustrations, belief in leadership & direction, and confidence in the future as related to the acquisition.  To be effective, however, people must believe in the confidentiality of the survey and that action will be taken based on its results.

Remember the People

The people issues increase the complexity of successfully leading an organization.  It is a difficult and never-ending responsibility to keep people united toward a common purpose in a way that leads to continual growth in revenues and earnings.  This complexity grows exponentially when a new group of people with a unique set of values and concerns are added to the mix.

Recognizing the complexity of the process and attending to the human elements of integration - specifically, fear and alignment - can greatly increase the speed and potential benefit of the acquisition.

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